What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-03-03 compared with 2021-03-02 · 158 added, 439 removed, 183 unchanged (77% of the section changed)

9 unchanged sentences

We report fiscal years under a 52/53 week format and as a result, certain fiscal years will contain 53 weeks.

Each of the fiscal years ended January 2, 2022 ("fiscal year 2021") and December 29, 2019 ("fiscal year 2019") included 52 weeks.

The fiscal year ended January 3, 2021 ("fiscal year 2020") included 53 weeks.

The additional week in fiscal year 2021 has been reflected in our first quarter.

Each of the fiscal years ended December 29, 2019 ("fiscal year 2019") and December 30, 2018 ("fiscal year 2018") included 52 weeks.

The fiscal year ending January 1, 2023 ("fiscal year 2022") will include 52 weeks.

1 unchanged sentence

During fiscal year 2021, we continued to see strong returns from our acquisitions as well as our organic investments across technology, marketing and people.

Our overall revenue in fiscal year 2020 increased $899.1 million, or 31%, as compared to fiscal year 2019, reflecting an increase of $929.4 million, or 82%, in our Diagnostics segment revenue partially offset by a decrease of $30.4 million, or 2%, in our Discovery & Analytical Solutions segment revenue.

The increase in our Diagnostics segment revenue during fiscal year 2020 was primarily driven by increased demand for our COVID-19 product offerings resulting in an increase of $547.4 million from our immunodiagnostics revenue and an increase of $398.3 million from our applied genomics revenue partially offset by a decrease of $16.2 million from our reproductive health revenue.

The decrease in our Discovery & Analytical Solutions segment during fiscal year 2020 was driven by a decrease of $85.4 million from our applied markets revenue partially offset by an increase of $55.0 million from our life sciences market revenue.

In our Diagnostics segment, we experienced tremendous demand for our immunodiagnostics and applied genomics COVID-19 product and service offerings across all regions.

In our reproductive health business, an expanded range of product offerings and increased geographic reach partially offset the impact of declining birthrates.

In our Discovery & Analytical Solutions s egment, the decrease in our applied markets revenue was driven by reduced demand as a result of the COVID-19 pandemic, resulting in a decrease in revenue from our industrial, environmental and food markets.

The increase in our life sciences market revenue was the result of an increase in revenue in our pharmaceutical and biotechnology markets driven by continued growth of our Informatics and OneSource businesses, partially offset by a decrease in revenue from our academia and governmental markets.

Our consolidated gross margins increased 736 basis points in fiscal year 2020, as compared to fiscal year 2019, primarily due to higher sales volume, favorable shift in product mix and continued productivity initiatives to improve our supply chain, partially offset by increased amortization expense.

Our consolidated operating margin increased 1,332 basis points in fiscal year 2020, as compared to fiscal year 2019, primarily due to higher sales volume, which was partially offset by increased amortization of intangible assets, investments in new product development and growth initiatives.

O verall, we believe that our strategic priorities and recent portfolio transformations, coupled with our expanded range of product offerings, leading market positions, global scale and financial strength provides us with a foundation for continued growth.

Our overall revenue in fiscal year 2021 increased $1,284.4 million, or 34%, as compared to fiscal year 2020, reflecting an increase of $865.0 million, or 42%, in our Diagnostics segment revenue and an increase o f $419.4 million, or 24%, in our Discovery & Analytical Solutions segment revenue.

Revenue from our 2021 acquisitions contributed $219.7 million to the increase in our overall revenue during fiscal year 2021.

The increase in our Diagnostics segment revenue during fiscal year 2021 was primarily driven by increased demand for our COVID-19 product offerings resulting in an increase of $749.0 million in our immunodiagnostics revenue.

Our Diagnostics segment revenue also increased during fiscal year 2021 due to growth in our core product offerings resulting in an increase of $61.9 million in our reproductive health revenue and an increase of $54.2 million in our applied genomics revenue.

Revenue from our 2021 acquisitions contributed $95.5 million to the increase in our Diagnostics segment revenue during fiscal year 2021.

The increase in our Discovery & Analytical Solutions segment revenue during fiscal year 2021 was driven by an increase of $305.1 million in our life sciences market revenue and an increase of $114.3 million in our applied markets revenue.

Revenue from our 2021 acquisitions contributed $124.3 million to the increase in our Discovery & Analytical Solutions segment revenue during fiscal year 2021.

In our Diagnostics segment, we experienced tremendous demand for our immunodiagnostics COVID-19 product offerings, particularly in the Americas, partially offset by a decline in demand for these product offerings in the Asia-Pacific region.

We also experienced strong growth in our immunodiagnostics and applied genomics core product and service offerings across all regions.

In our reproductive health business, an expanded range of product offerings and increased geographic reach more than offset the impact of declining birthrates.

In our Discovery & Analytical Solutions s egment, the increase in our life sciences market revenue was the result of an increase in revenue in our pharmaceutical and biotechnology markets, as well as an increase in revenue from our Informatics business.

The increase in our applied markets revenue was driven by increased demand from our industrial, environmental and food markets.

Our consolidated gross margins increased 49 basis points in fiscal year 2021, as compared to fiscal year 2020, primarily due to higher sales volume, a favorable shift in product mix and continued productivity initiatives to improve our supply chain, partially offset by increased amortization expense.

Our consolidated operating margin increased 42 basis points in fiscal year 2021, as compared to fiscal year 2020, primarily due to higher sales volume leverage and increased sales of our COVID-19 products offerings, which were partially offset by increased amortization of intangible assets, investments in new product development and growth initiatives.

Overall, we believe that our strategic priorities and recent portfolio transformations, coupled with our expanded range of product offerings, leading market positions, global scale and financial strength provides us with a foundation for continued revenue growth, strong margins and cash flows, and long-term earnings per share growth.

Consolidated Results of Operations

Fiscal Year 2021 Compared to Fiscal Year 2020

Revenue for fiscal year 2020 was $3.8 billion, as compared to $2.9 billion for fiscal year 2019, an increase of $899.1 million, or 31%, w hich includes an approximate 2% increase in revenue attributable to acquisitions and divestitures.

Revenue for fiscal year 2021 was $5.1 billion, as compared to $3.8 billion for fiscal year 2020, an increase of $1.3 billion, or 34%, w hich includes an approximate 8% increase in revenue attributable to acquisitions and divestitures, and a 1% increase in revenue attributable to favorable changes in foreign exchange rates.

Revenue from our 2021 acquisitions contributed $219.7 million to the increase in our overall revenue during fiscal year 2021.

The analysis in the remainder of this paragraph compares segment revenue for fiscal year 2021 as compared to fiscal year 2020 and includes the effect of foreign exchange rate fluctuations, and acquisitions and divestitures.

The total increase in revenue reflects an increase in our Diagnostics segment revenue of $929.4 million, or 82%, due to increased demand for our COVID-19 product offerings resulting in an increase of $547.4 million from our immunodiagnostics revenue and an increase of $398.3 million from our applied genomics revenue, partially offset by a decrease of $16.2 million in our reproductive health revenue.

Our Discovery & Analytical Solutions segment revenue decreased by $30.4 million, or 2%, due to a decrease of $85.4 million from our applied markets revenue, partially offset by an increase of $55.0 million from our life sciences market revenue.

As a result of adjustments to deferred revenue related to certain acquisitions required by business combination rules, we did not recognize $0.8 million of revenue primarily related to our Diagnostics segment for each of fiscal years 2020 and 2019 and $0.3 million of revenue primarily related to our Discovery & Analytical Solutions segment in fiscal year 2020 that otherwise would have been recorded by the acquired businesses during each of the respective periods.

The total increase in revenue reflects an increase in our Diagnostics segment revenue of $865.0 million, or 42%, due to increased demand for our COVID-19 product offerings resulting in an increase of $749.0 million in our immunodiagnostics revenue.

Our Discovery & Analytical Solutions segment revenue increased by $419.4 million, or 24%, due to an increase of $305.1 million from our life sciences market revenue and an increase of $114.3 million from our applied markets revenue.

As a result of adjustments to deferred revenue related to certain acquisitions required by business combination rules, we did not recognize $0.8 million of revenue primarily related to our Diagnostics segment for each of fiscal years 2021 and 2020 and $1.8 million and $0.3 million of revenue primarily related to our Discovery & Analytical Solutions segment in fiscal years 2021 and 2020 that otherwise would have been recorded by the acquired businesses during each of the respective periods.

Cost of Revenue

2 unchanged sentences

Amortization of intangible assets increased and was $115.1 million for fiscal year 2021, as compared to $65.3 million for fiscal year 2020.

Stock-based compensation expense was $1.4 million for fiscal year 2020, as compared to $1.6 million for fiscal year 2019.

Amortization of intangible assets from our 2021 acquisitions amounted to $34.0 million.

The amortization of purchase accounting adjustments to record the inventory from certain acquisitions added an incremental expense of $35.2 million for fiscal year 2021, as compared to $2.8 million for fiscal year 2020.

Asset impairment added an incremental expense of $7.9 million for fiscal year 2020.

In addition to the factors noted above, the overall increase in gross margin is primarily the result of higher sales volume, favorable shift in product mix and continued productivity initiatives to improve our supply chain partially offset by increased amortization expense.

Other purchase accounting adjustments added an incremental expense of $1.8 million for fiscal year 2021, of which $1.6 million was acquisition-related stock compensation and $0.2 million was increased depreciation on property, plant and equipment.

Asset impairment was $7.9 million for fiscal year 2020.

In addition to the factors noted above, the overall increase in gross margin was primarily the result of higher sales volume, a favorable shift in product mix and continued productivity initiatives to improve our supply chain, partially offset by increased amortization expense.

Selling, General and Administrative Expenses

2 unchanged sentences

Amortization of intangible assets increased to $175.1 million for fiscal year 2021, as compared to $127.3 million for fiscal year 2020.

Stock-based compensation expense decreased to $26.5 million for fiscal year 2020, as compared to $28.8 million for fiscal year 2019.

Acquisition and divestiture-related expenses added an incremental expense of $8.7 million for fiscal year 2020 as compared to $4.0 million for fiscal year 2019.

Other purchase accounting adjustments decreased expenses by $8.8 million for fiscal year 2020, as compared to increasing expenses by $3.9 million for fiscal year 2019.

Amortization of intangible assets from our 2021 acquisitions amounted to $37.2 million.

Acquisition and divestiture-related expenses added an incremental expense of $83.4 million for fiscal year 2021, of which $3.9 million was acquisition-related stock compensation, as compared to acquisition and divestiture-related expenses increasing expenses by $8.7 million for fiscal year 2020.

Purchase accounting adjustments added an incremental expense of $3.2 million for fiscal year 2021, of which $3.1 million was change in contingent consideration and $0.1 million was increased depreciation on property, plant and equipment, as compared to purchase accounting adjustments decreasing expenses by $8.8 million for fiscal year 2020, which was attributable to change in contingent consideration.

Asset impairment costs added an incremental expense of $3.9 million for fiscal year 2021.

Legal costs for significant litigation matters and settlements were $0.1 million for fiscal year 2021, as compared to $7.1 million for fiscal year 2020.

Costs for significant environmental matters added an incremental expense of $5.2 million for fiscal year 2020.

Acceleration of executive compensation was $7.7 million for fiscal year 2019.

In addition to the above items, the increase in selling, general and administrative expenses was primarily the result of costs related to investments in people, digital capabilities and innovation and the extra fiscal week, which were partially offset by lower costs resulting from cost containment and productivity initiatives.

Costs for significant environmental matters were $5.2 million for fiscal year 2020.

In addition to the above items, the increase in selling, general and administrative expenses was primarily the result of costs related to investments in people, digital capabilities and innovation, and recent acquisitions amplified by pandemic-related cost controls and disruptions in the prior year.

Research and Development Expenses

Research and development expenses for fiscal year 2021 were $275.0 million, as compared to $205.4 million for fiscal year 2020, an increase of $69.6 million, or 33.9%.

As a percentage of revenue, research and development expenses decreased to 5.4% in fiscal year 2020, as compared to 6.6% in fiscal year 2019, primarily driven by outsized volume increases.

Stock-based compensation expense was $1.2 million in fiscal year 2020, as compared to $1.1 million in fiscal year 2019.

In addition to the above items, the increase in research and development expenses was driven by investments in new product development.

Research and development expenses from our 2021 acquisitions were $25.4

As a percentage of revenue, research and development expenses were flat at 5.4% in each of fiscal years 2021 and 2020.

Stock compensation related to our acquisitions added an incremental expense of $1.4 million in fiscal year 2021.

Purchase accounting adjustments for depreciation on property, plant and equipment added an incremental expense of $0.1 million in fiscal year 2021.

The increase in research and development expenses was driven by our investments in new product development.

Restructuring and Other Costs, Net

1 unchanged sentence

Restructuring and other costs, net were $16.4 million for fiscal year 2021 as compared to $8.0 million for fiscal year 2020.

We implemented a restructuring plan in the first quarter of fiscal year 2020 consisting of workforce reductions and closure of excess facilities principally intended to realign resources to emphasize growth initiatives (the "Q1 2020 Plan").

We implemented a restructuring plan in the third quarter of fiscal year 2020 consisting of workforce reductions principally intended to realign resources to emphasize growth initiatives ("Q3 2020 Plan").

We implemented a restructuring plan in each quarter of fiscal year 2019 consisting of workforce reductions principally intended to realign resources to emphasize growth initiatives (the "Q1 2019 Plan", "Q2 2019 Plan", "Q3 2019 Plan" and "Q4 2019 Plan", respectively).

All other previous restructuring plans were workforce reductions or the closure of excess facility space principally intended to integrate our businesses in order to realign operations, reduce costs, achieve operational efficiencies and shift resources into geographic regions and end markets that are more consistent with our growth strategy (the "Previous Plans").

The following table summarizes the number of employees reduced, the initial restructuring or contract termination charges by operating segment, and the dates by which payments were substantially completed, or the expected dates by which payments will be substantially completed, for restructuring actions implemented during fiscal years 2020 and 2019 in continuing operations:

Workforce Reductions Closure of Excess Facility Total (Expected) Date Payments Substantially Completed by

Headcount Reduction Diagnostics Discovery & Analytical Solutions Diagnostics Discovery & Analytical Solutions Severance Excess Facility

(In thousands, except headcount data)

Q3 2020 Plan 23 $ 901 $ 2,080 $ — $ — $ 2,981 Q2 FY2021 —

Q1 2020 Plan 32 1,134 2,312 682 92 4,220 Q4 FY2020 Q1 FY2022

Q4 2019 Plan 22 2,404 177 — — 2,581 Q3 FY2020 —

Q3 2019 Plan 259 2,641 11,156 — — 13,797 Q2 FY2020 —

Q2 2019 Plan 44 1,129 4,461 — — 5,590 Q1 FY2020 —

Q1 2019 Plan 105 1,459 6,001 — — 7,460 Q4 FY2019 —

We expect to make payments under the Previous Plans for remaining residual lease obligations, with terms varying in length, through fiscal year 2022.

We also have terminated various contractual commitments in connection with certain disposal activities and have recorded charges, to the extent applicable, for the costs of terminating these contracts before the end of their terms and the costs that will continue to be incurred for the remaining terms without economic benefit to us.

We recorded additional pre-tax charges of $0.2 million during each of fiscal years 2020 and 2019 in the Discovery & Analytical Solutions segment and $0.1 million and $0.2 million during fiscal years 2020 and 2019, respectively, in the Diagnostics segment, as a result of these contract terminations.

We recorded pre-tax charges of $4.3 million and $0.8 million associated with relocating facilities during fiscal years 2020 and 2019.

We implemented restructuring plans in fiscal years 2021 and 2020, consisting of workforce reductions principally intended to realign resources to emphasize growth initiatives and integrate new acquisitions.

We have also terminated various contractual commitments in connection with certain disposal activities and relocating operations and have recorded charges, to the extent applicable, for the costs of terminating these contracts before the end of their terms and the costs that will continue to be incurred for the remaining terms without economic benefit to us.

The aggregate charges for these actions totaled $0.2 million during fiscal year 2020.

See Note 4, Restructuring and Other Costs, Net, in the Notes to Consolidated Financial Statements for further discussion of the restructuring activities.

Interest and Other Expense, Net

Interest and other expense, net, consisted of the following:

2021 December 29,

Interest and other expense, net, consisted of the following for the fiscal years ended:

2022 January 3,

(In thousands)

Interest income $ (2,241) $ (1,010)

Interest expense 49,712 63,627

Loss on disposition of businesses and assets, net — 2,469

Debt extinguishment costs — 32,541

Interest expense including costs of bridge financing 102,128 49,712

Change in fair value of financial securities

(10,985) (35)

Other components of net periodic pension (credit) cost

(39,767) 18,833

Other expense, net 3,357 4,717

Total interest and other expense, net $ 52,492 $ 72,217

Interest and other expense, net, for fiscal year 2020 was $72.2 million, as compared to $124.8 million for fiscal year 2019, a decrease of $52.6 million.

The decrease in interest and other expense, net, in fiscal year 2020 as compared to fiscal year 2019 was largely due to a decrease in debt extinguishment costs of $32.5 million primarily associated with the redemption of the November 2021 Notes in the fourth quarter of fiscal year 2019;

a decrease of $13.9 million in interest expense related to the full year benefit of the lower interest rate on the 2029 Notes that replaced the November 2021 Notes;

a decrease in other expense, net of $4.2 million primarily due to a decrease in pension-related expenses;

and a decrease in loss on disposition of businesses and assets, net of $2.5 million.

The decrease of $19.7 million in interest and other expense, net, in fiscal year 2021 as compared to fiscal year 2020 was largely due to a net pension credit of $39.8 million in fiscal year 2021 as compared to a net pension cost of $18.8 million in fiscal year 2020, a decrease in other expense, net of $1.4 million and a change in fair value of financial securities of $11.0 million, partially offset by an increase of $52.4 million in interest expense in fiscal year 2021.

The increase of $52.4 million in interest expense in fiscal year 2021 was the result of $23.4 million of costs of bridge financing and debt pre-issuance hedges that were recognized in fiscal year 2021 and interest expense from new debt in fiscal year 2021.

A more complete discussion of our liquidity is set forth below under the heading “Liquidity and Capital Resources.”

4 unchanged sentences

federal statutory income tax rate to the recorded tax provision is as follows for the fiscal years ended:

2021 December 29,

2022 January 3,

(In thousands)

7 unchanged sentences

Change in valuation allowance 3,070 10

Rate change on long term intangibles 14,031 —

Effect of foreign operations 37,147 —

Foreign consolidations — 15,222

Tax elections — (3,700)

Impact of U.S.

Tax Act — 2,718

Others, net 4,787 (4,753)

Total $ 336,603 $ 178,266

The variation in our effective tax rate for each year is primarily a result of the recognition of earnings in foreign jurisdictions, predominantly Finland, Singapore and the United Kingdom in fiscal year 2020 and Finland, Singapore and The Netherlands in fiscal years 2019 and 2018, which are taxed at rates lower than the U.S.

federal statutory rate, resulting in a benefit from income t axes of $42.5 million in fiscal year 2020 and $16.7 million in fiscal year 2019.

These amounts include $21.8 million in fiscal year 2020 and $10.4 million in fiscal year 2019 of benefits derived from tax holidays in China and Singapore.

The effect of these benefits, derived from tax holidays, on basic and diluted earnings per share for fiscal year 2020 was $0.20 and $0.19, resp ectively, and for fiscal year 2019 was $0.09 and $0.09, respectively.

The variation in our effective tax rate for fiscal year 2021 is primarily affected by the recognition of $37.1 million in U.S.

federal, U.S.

state and non-U.S.

taxes due when we repatriate foreign earnings that we no longer consider indefinitely reinvested.

We also recognized $19.0 million in fiscal year 2021 and $21.8 million in fiscal year 2020 of benefits derived from tax holidays in China and Singapore.

The effect of these benefits, derived from tax holidays, on basic and diluted earnings per share for fiscal year 2021 was $0.16 and $0.16, respectively, and for fiscal year 2020 was $0.20 and $0.19, respectively.

The tax holiday in China is renewed every three years.

The Company expects to renew the tax holiday for two of our subsidiaries in China that expired in fisc al year 2020.

We expect to renew the tax holiday for two of our subsidiaries in China that expired in fiscal year 2021.

The tax holiday for one of our subsidiaries in Singapore is scheduled to expire in fiscal year 2023.

Disposition of Businesses and Assets

As part of our continuing efforts to focus on higher growth opportunities, we have discontinued certain businesses.

When the discontinued operations represented a strategic shift that will have a major effect on our operations and financial statements, we accounted for these businesses as discontinued operations and accordingly, have presented the results of operations and related cash flows as discontinued operations.

Any business deemed to be a discontinued operation prior to the adoption of Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of An Entity, continues to be reported as a discontinued operation, and the results of operations and related cash flows are presented as discontinued operations for all periods presented.

Any remaining assets and liabilities of these businesses have been presented separately, and are reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of January 3, 2021 and December 29, 2019.

We recorded a provision for income taxes of $0.1 million and $0.2 million on discontinued operations and dispositions in fiscal years 2020 and 2019.

Fiscal Year 2020 Compared to Fiscal Year 2019

For a discussion of our results of operations for fiscal year 2019 as compared to fiscal year 2018, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our annual report on Form 10-K for the fiscal year ended December 29, 2019 filed with the Securities and Exchange Commission on February 25, 2020.

For a discussion of our results of operations for fiscal year 2020 as compared to fiscal year 2019, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our annual report on Form 10-K for the fiscal year ended January 3, 2021 filed with the Securities and Exchange Commission on March 2, 2021.

Business Combinations

Acquisitions in fiscal year 2021

During the fiscal year 2020, we completed the acquisition of four businesses for aggregate consideration of $438.7 million.

The acquired businesses include Horizon Discovery Group plc (“Horizon”), a company based in Cambridge, UK with approximately 400 employees, which was acquired on December 23, 2020 for a total consideration of $399.4 million (£296.0 million), and three other businesses which were acquired for a total consideration of $39.3 million.

The excess of the purchase prices over the fair values of the acquired businesses' net assets represents cost and revenue synergies specific to us, as well as non-capitalizable intangible assets, such as the employee workforces acquired, and has been allocated to goodwill, which is not tax deductible.

We reported the operations for these acquisitions within the results of our Diagnostics and Discovery & Analytical Solutions segments, as applicable, from the acquisition dates.

Identifiable definite-lived intangible assets, such as core technology, trade names, customer relationships and in-process research and development ("IPR&D"), acquired as part of these acquisitions had a weighted average amortization period of 11.0 years.

Acquisitions in Fiscal Year 2019

During the fiscal year 2019, we completed the acquisition of five businesses for aggregate consideration of $433.1 million.

The acquired businesses include Cisbio Bioassays SAS, a company based in Codolet, France, which was acquired for a total consideration of $219.9 million, Shandong Meizheng Bio-Tech Co., Ltd., a company headquartered in Beijing, China, for a total consideration of $166.5 million, and three other businesses were acquired for a total consideration of $46.6 million.

We have a potential obligation to pay the former shareholders of certain of these acquired businesses additional contingent consideration of up to $31.8 million.

We have reported the operations for these acquisitions within the results of our Diagnostics and Discovery & Analytical Solutions segments, as applicable, from the acquisition dates.

Identifiable definite-lived intangible assets, such as core technology, trade names and customer relationships, acquired as part of these acquisitions had a weighted average amortization period of 11.0 years.

Acquisition of BioLegend, Inc.

In fiscal year 2021, we completed the acquisition of BioLegend, Inc.

("BioLegend") for an aggregate consideration of $5.7 billion.

BioLegend's revenue and net loss for the period from the acquisition date to January 2, 2022 were $91.7 million and $25.8 million, respectively.

Other acquisitions in 2021.

During fiscal year 2021, we also completed the acquisition of seven other businesses for aggregate consideration of $1.2 billion.

The acquired businesses include Oxford Immunotec Global PLC for a total consideration of $590.9 million and Nexcelom Bioscience Holdings, LLC for a total consideration of $267.3 million, and five other businesses, which were acquired for a total consideration of $331.0 million.

Acquisitions in Fiscal Year 2020

For a discussion of our acquisitions for fiscal year 2018, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our annual report on Form 10-K for the fiscal year ended December 29, 2019 filed with the Securities and Exchange Commission on February 25, 2020.

As of January 3, 2021, the allocations of purchase prices for acquisitions completed in fiscal years 2019 and 2018 were final.

The preliminary allocations of the purchase prices for acquisitions completed in fiscal year 2020 were based upon initial valuations.

Our estimates and assumptions underlying the initial valuations are subject to the collection of information necessary to complete our valuations within the measurement periods, which are up to one year from the respective acquisition dates.

The primary areas of the preliminary purchase price allocations that are not yet finalized relate to the fair value of certain

tangible and intangible assets acquired and liabilities assumed, assets and liabilities related to income taxes and related valuation allowances, and residual goodwill.

We expect to continue to obtain information to assist in determining the fair values of the net assets acquired at the acquisition dates during the measurement periods.

During the measurement periods, we will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition dates that, if known, would have resulted in the recognition of those assets and liabilities as of those dates.

These adjustments will be made in the periods in which the amounts are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition dates.

All changes that do not qualify as adjustments made during the measurement periods are also included in current period earnings.

During fiscal year 2020, we obtained information relevant to determining the fair values of certain tangible and intangible assets acquired, and liabilities assumed, related to recent acquisitions and adjusted our purchase price allocations.

Based on this information, we recognized an increase in intangible assets of $1.9 million, an increase in deferred tax liabilities of $0.4 million, a decrease in goodwill of $1.8 million, and a decrease in liabilities assumed of $0.4 million.

Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and are subject to adjustment upon finalization of the purchase price allocations.

The accounting for business combinations requires estimates and judgments as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair values for assets acquired and liabilities assumed.

The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques.

Contingent consideration is measured at fair value at the acquisition date, based on the probability that revenue thresholds or product development milestones will be achieved during the earnout period, with changes in the fair value after the acquisition date affecting earnings to the extent it is to be settled in cash.

Increases or decreases in the fair value of contingent consideration liabilities primarily result from changes in the estimated probabilities of achieving revenue thresholds or product development milestones during the earnout period.

As of January 3, 2021, we may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $7.3 million.

As of January 3, 2021, we have recorded contingent consideration obligations of $3.0 million, of which $2.9 million was recorded in accrued expenses and other current liabilities, and $0.1 million was recorded in long-term liabilities.

As of December 29, 2019, we have recorded contingent consideration obligations of $35.5 million, of which $20.8 million was recorded in accrued expenses and other current liabilities, and $14.7 million was recorded in long-term liabilities.

The expected maximum earnout period for acquisitions with open contingency periods does not exceed 2.9 years from January 3, 2021, and the remaining weighted average expected earnout period at January 3, 2021 was 1.9 years.

If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the consolidated financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of definite-lived intangible assets or the recognition of additional contingent consideration which would be recognized as a component of operating expenses from continuing operations.

In connection with the purchase price allocations for acquisitions, we estimate the fair value of deferred revenue assumed with our acquisitions.

The estimated fair value of deferred revenue is determined by the legal performance obligation at the date of acquisition, and is generally based on the nature of the activities to be performed and the related costs to be incurred after the acquisition date.

The fair value of an assumed liability related to deferred revenue is estimated based on the current market cost of fulfilling the obligation, plus a normal profit margin thereon.

The estimated costs to fulfill the deferred revenue are based on the historical direct costs related to providing the services.

We do not include any costs associated with selling effort, research and development, or the related margins on these costs.

In most acquisitions, profit associated with selling effort is excluded because the acquired businesses would have concluded the selling effort on the support contracts prior to the acquisition date.

The estimated research and development costs are not included in the fair value determination, as these costs are not deemed to represent a legal obligation at the time of acquisition.

The sum of the costs and operating income approximates, in theory, the amount that we would be required to pay a third-party to assume the obligation.

Contingencies, Including Tax Matters

We are conducting a number of environmental investigations and remedial actions at our current and former locations and, along with other companies, have been named a potentially responsible party (“PRP”) for certain waste disposal sites.

We accrue for environmental issues in the accounting period that our responsibility is established and when the cost can be reasonably estimated.

We have accrued $12.9 million and $7.7 million as of January 3, 2021 and December 29, 2019, respectively, in accrued expenses and other current liabilities, which represents our management’s estimate of the cost of the remediation of known environmental matters, and does not include any potential liability for related personal injury or property damage claims.

Our environmental accrual is not discounted and does not reflect the recovery of any material amounts through insurance or indemnification arrangements.

The cost estimates are subject to a number of variables, including the stage of the

environmental investigations, the magnitude of the possible contamination, the nature of the potential remedies, possible joint and several liability, the time period over which remediation may occur, and the possible effects of changing laws and regulations.

For sites where we have been named a PRP, our management does not currently anticipate any additional liability to result from the inability of other significant named parties to contribute.

We expect that the majority of such accrued amounts could be paid out over a period of up to ten years.

As assessment and remediation activities progress at each individual site, these liabilities are reviewed and adjusted to reflect additional information as it becomes available.

There have been no environmental problems to date that have had, or are expected to have, a material adverse effect on our consolidated financial statements.

While it is possible that a loss exceeding the amounts recorded in the consolidated financial statements may be incurred, the potential exposure is not expected to be materially different from those amounts recorded.

Various tax years after 2010 remain open to examination by certain jurisdictions in which we have significant business operations, such as China, Finland, Germany, Luxembourg, The Netherlands, Singapore, the United Kingdom and the United States.

The tax years under examination vary by jurisdiction.

We regularly review our tax positions in each significant taxing jurisdiction in the process of evaluating our unrecognized tax benefits.

We make adjustments to our unrecognized tax benefits when:

(i) facts and circumstances regarding a tax position change, causing a change in management’s judgment regarding that tax position;

(ii) a tax position is effectively settled with a tax authority;

and/or (iii) the statute of limitations expires regarding a tax position.

We are subject to various claims, legal proceedings and investigations covering a wide range of matters that arise in the ordinary course of our business activities.

Although we have established accruals for potential losses that we believe are probable and reasonably estimable, in our opinion, based on our review of the information available at this time, the total cost of resolving these contingencies at January 3, 2021 should not have a material adverse effect on our consolidated financial statements included in this annual report on Form 10-K.

However, each of these matters is subject to uncertainties, and it is possible that some of these matters may be resolved unfavorably to us.

During fiscal year 2020, we completed the acquisition of four businesses for aggregate consideration of $438.9 million.

The acquired businesses include Horizon Discovery Group plc (“Horizon”), a company based in Cambridge, UK with approximately 400 employees, which was acquired on December 23, 2020 for a total consideration of $399.8 million (£296.0 million), and three other businesses which were acquired for a total consideration of $39.1 million.

See Note 3, Business Combinations, in the Notes to Consolidated Financial Statements for a detailed discussion of our acquisitions.

Reporting Segment Results of Continuing Operations

1 unchanged sentence

Fiscal Year 2021 Compared to Fiscal Year 2020

Revenue for fiscal year 2020 was $1,715.8 million, as compared to $1,746.2 million for fiscal year 2019, a decrease of $30.4 million, or 2%, which includes an appro ximate 2% increase in revenue attributable to acquisitions and divestitures.

As a result of adjustments to deferred revenue related to certain acquisitions required by business combination rules, we did not recognize $0.3 million of revenue primarily related to our Discovery & Analytical Solutions segment for fiscal year 2020 that otherwise would have been recorded by the acquired businesses during the period.

Revenue for fiscal year 2021 was $2,135.2 million, as compared to $1,715.8 million for fiscal year 2020, an increase of $419.4 million, or 24%, which includes an appro ximate 12% increase in revenue attributable to acquisitions and divestitures and a 1% increase in revenue attributable to favorable changes in foreign exchange rates.

Revenue from our 2021 acquisitions contributed $124.3 million to the increase in our Discovery & Analytical Solutions segment revenue during fiscal year 2021.

As a result of adjustments to deferred revenue related to certain acquisitions required by business combination rules, we did not recognize $1.8 million and $0.3 million of revenue primarily related to our Discovery & Analytical Solutions segment for fiscal years 2021 and 2020, respectively, that otherwise would have been recorded by the acquired businesses during the period.

The analysis in the remainder of this paragraph compares revenue by end-market for fiscal year 2021, as compared to fiscal year 2020, and includes the effect of foreign exchange fluctuations and acquisitions and divestitures.

The decrease in revenue in our Discovery & Analytical Solutions segment was a result of a decrease of $85.4 million from our applied markets revenue, partially offset by an increase of $55.0 million from our life sciences market revenue.

The decrease in our applied markets revenue was driven by reduced demand as a result of the COVID-19 pandemic, resulting in a decrease in revenue from our industrial, environmental and food markets.

The increase in our life sciences market revenue was the result of an increase in revenue in our pharmaceutical and biotechnology markets driven by continued growth in our Informatics and OneSource businesses, which were partially offset by a decrease in revenue from our academia and governmental markets.

Operating income from continuing operations for fiscal year 2020 was $183.5 million, as compared to $238.3 million for fiscal year 2019, a decrease of $54.9 million, or 23%.

The increase in revenue in our Discovery & Analytical Solutions segment was a result of an increase of $305.1 million in our life sciences market revenue and an increase of $114.3 million in our applied markets revenue.

The increase in our life sciences market revenue was the result of an increase in revenue in our pharmaceutical and biotechnology markets driven by continued growth of our Informatics business.

The increase in our applied markets revenue was driven by increased demand from our industrial, environmental and food markets.

Operating income from continuing operations for fiscal year 2021 was $189.8 million, as compared to $183.5 million for fiscal year 2020, an increase of $6.3 million, or 3%.

Amortization of intangible assets increased to $113.8 million for fiscal year 2021 as compared to $76.3 million for fiscal year 2020.

Amortization of intangible assets from our 2021 acquisitions amounted to $55.1 million.

The amortization of purchase accounting adjustments to record the inventory from certain acquisitions added an incremental expense of $23.8 million in fiscal year 2021, as compared to $1.3 million for fiscal year 2020.

Acquisition and divestiture-related costs, contingent consideration and other costs decreased expenses by $4.0 million for fiscal year 2020, as compared to incremental expense of $2.1 million for fiscal year 2019.

Legal costs for significant litigation matters and settlements were $5.9 million for fiscal year 2020, as compared to $2.2 million for fiscal year 2019.

Restructuring and other costs, net decreased to $3.8 million for fiscal year 2020 as compared to $22.0 million for fiscal year 2019.

In addition to the factors noted above, the overall decrease in operating income for fiscal year 2020 as compared to fiscal year 2019, was primarily as a result of lower sales volume and increased investments in new product development and growth initiatives, partially offset by pricing initiatives and services productivity.

Acquisition and divestiture-related costs, contingent consideration and other costs added an incremental expense of $76.6 million for fiscal year 2021, as compared to decreasing expenses by $4.0 million for fiscal year 2020.

Legal costs for significant litigation matters and settlements were $5.9 million for fiscal year 2020.

Restructuring and other costs, net were $11.3 million for fiscal year 2021 as compared to $3.8 million for fiscal year 2020.

Excluding the factors noted above, the overall increase in operating income for fiscal year 2021 as compared to fiscal year 2020, was primarily as a result of higher sales volume and favorable product mix, partially offset by increased investments in new product development and growth initiatives.

Fiscal Year 2020 Compared to Fiscal Year 2019

Fiscal Year 2021 Compared to Fiscal Year 2020

Revenue for fiscal year 2020 was $2,066.9 million, as compared to $1,137.5 million for fiscal year 2019, an increase of $929.4 million, or 82%.

Revenue for fiscal year 2021 was $2,931.9 million, as compared to $2,066.9 million for fiscal year 2020, an increase of $865.0 million, or 42%, which includes an appro ximate 5% increase in revenue attributable to acquisitions and divestitures and a 2% increase in revenue attributable to favorable changes in foreign exchange rates.

Revenue from our 2021 acquisitions contribute d $95.5 million to the increase in our Dia gnostics segment revenue during fiscal year 2021.

As a result of adjustments to deferred revenue related to certain acquisitions required by business combination rules, we did not recognize $0.8 million of revenue for each of fiscal years 2021 and 2020 that otherwise would have been recorded by the acquired businesses during each of the respective periods.

The increase in our Diagnostics segment was driven by increased demand for our immunodiagnostics and applied genomics COVID-19 product offerings, partially offset by a decrease in revenue from our reproductive health business.

Operating income from continuing operations for fiscal year 2021 was $1,219.9 million, as compared to $874.2 million for fiscal year 2020, an increase of $345.7 million, or 40%.

Amortization of intangible assets increased and was $176.5 million for fiscal year 2021 as compared to $116.3 million for fiscal year 2020.

Restructuring and other costs, net decreased and were $4.3 million for fiscal year 2020 as compared to $7.5 million for fiscal year 2019.

Amortization of intangible assets from our 2021 acquisitions amounted to $16.2 million.

Restructuring and other costs, net increased and were $5.1 million for fiscal year 2021 as compared to $4.3 million for fiscal year 2020.

Acquisition and divestiture-related expenses, contingent consideration and other costs added an incremental expense of $15.9 million in fiscal year 2021, as compared to an incremental expense of $5.0 million for fiscal year 2020.

1 unchanged sentence

Legal costs for significant litigation matters and settlements were $0.1 million for fiscal year 2021, as compared to $1.2 million for fiscal year 2020.

Asset impairment was $7.9 million for fiscal year 2020.

In addition to the factors noted above, operating income increased during fiscal year 2020, as compared to fiscal year 2019, primarily as a result of higher sales volume and favorable product mix, partially offset by increased investments in new product development and growth initiatives.

Asset impairment was $3.9 million for fiscal year 2021, as compared to $7.9 million for fiscal year 2020.

Excluding the factors noted above, operating income increased during fiscal year 2021, as compared to fiscal year 2020, primarily as a result of higher sales volume and favorable product mix, partially offset by increased investments in new product development and growth initiatives.

Fiscal Year 2020 Compared to Fiscal Year 2019

Liquidity and Capital Resources

We require cash to pay our operating expenses, make capital expenditures, make strategic acquisitions, service our debt and other long-term liabilities, repurchase shares of our common stock and pay dividends on our common stock.

Our principal sources of funds are from our operations and the capital markets, particularly the debt markets.

Our principal sources of funds are cash flows from our operations, borrowing capacity available under our senior unsecured credit facility and access to the debt markets.

We anticipate that our internal operations will generate sufficient cash to fund our operating expenses, capital expenditures, smaller acquisitions, interest payments on our debt and dividends on our common stock.

However, we expect to use external sources to satisfy the balance of our debt when due, any larger acquisitions and other long-term liabilities, such as contributions to our postretirement benefit plans.

We and our subsidiaries and affiliates may from time to time, in our sole discretion, purchase, repay, redeem or retire any of our outstanding debt securities (including any publicly issued debt securities), in privately negotiated or open market transactions, by tender offer or otherwise, or extend or refinance any of our outstanding indebtedness.

Principal factors that could affect the availability of our internally generated funds include:

11 unchanged sentences

Net cash provided by continuing operations was $1,410.8 million for fiscal year 2021, as compared to $892.2 million for fiscal year 2020, an increase of $518.6 million.

The cash provided by operating activities for fiscal year 2020 was principally a result of income from continuing operations of $728.1 million, and non-cash charges, including depreciation and amortization of $246.5 million, stock based compensation expense of $29.1 million, a non-cash expense of $18.0 million related to our postretirement benefit plans, including the mark-to-market adjustment in the fourth quarter of fiscal year 2020, restructuring and other costs, net, of $8.0 million, asset impairment of $7.9 million, amortization of deferred debt issuance costs and accretion of discounts of $3.4 million, loss on disposition of businesses and assets, net, of $0.9 million and a net cash increase of $321.8 million in accrued expenses, other assets and liabilities and other items.

The change in accrued expenses, other assets and liabilities and other items increased cash provided by operating activities by $321.8 million for fiscal year 2020, whereas the changes in accrued expenses, other assets and liabilities and other items decreased cash provided by operating activities by $40.6 million for fiscal year 2019.

These changes primarily related to the timing of payments for pensions, taxes, restructuring, and salary and benefits, including the amortization of purchase accounting adjustments to record the inventory from certain acquisitions of $2.8 million for fiscal year 2020 as compared to $21.6 million for fiscal year 2019 and contingencies and non-cash tax matters, which increased cash provided by operating activities by $4.5 million for fiscal year 2020 as compared to decreasing cash provided by operating activities by $0.4 million for fiscal year 2019.

The cash provided by continuing operations during fiscal year 2020 was partially offset by a net cash decrease in working capital of $433.7 million, deferred tax benefit of $29.1 million and change in fair value of contingent consideration of $8.8 million.

Contributing to the net cash decrease in working capital for fiscal year 2020, excluding the effect of foreign exchange rate fluctuations, was an increase in accounts receivable of $373.9 million and an increase in inventory of $122.5 million, which were partially offset by an increase in accounts payable of $62.8 million.

The increase in accounts receivable was a result of higher sales volume in our Diagnostics segment partially offset by a reduction in terms and improved linearity due to COVID-19 demand.

The increase in inventory was primarily due to the ramp up of COVID-19 product offerings.

The increase in accounts payable were primarily the result of term extensions and ramp-up in COVID-19 inventory.

For fiscal year 2020, $13.3 million of contingent consideration payments were included in operating activities as compared to $20.9 million for fiscal year 2019.

We paid stay bonuses associated with our acquisition of Tulip Diagnostics Private Limited ("Tulip") of $11.8 million for fiscal year 2019.

During fiscal year 2020, we made contributions of $7.5 million, in the aggregate, to pension plans outside of the United States, as compared to $8.2 million during fiscal year 2019.

The cash provided by operating activities for fiscal year 2021 was principally a result of income from continuing operations of $943.3 million, adjustments for non-cash charges

aggregating to $363.1 million, including depreciation and amortization of $358.0 million, and a net cash increase in working capital of $104.4 million.

During fiscal year 2021, $1.7 million of contingent consideration payments were included in operating activities.

During fiscal year 2021, we contributed $6.9 million, in the aggregate, to pension plans outside of the United States, and $20.0 million to our defined benefit pension plan in the United States for the plan year 2019.

Investing Activities.

3 unchanged sentences

During fiscal year 2021, we purchased investments amounting to $23.1 million as compared to $20.1 million in fiscal year 2020.

We made purchases of licenses of $5.0 million in fiscal year 2019.

These items were partially offset by $4.3 million in proceeds from disposition of businesses and assets in fiscal year 2020 as compared to $0.6 million in proceeds from disposition of businesses and assets in fiscal year 2019.

Proceeds from surrender of life insurance policies were $0.3 million in fiscal year 2020.

These items were partially offset by $1.5 million in proceeds from disposition of businesses and assets in fiscal year 2021, as compared to $4.3 million in fiscal year 2020, and by proceeds from surrender of life insurance policies of $0.1 million in fiscal year 2021, as compared to $0.3 million in fiscal year 2020.

Financing Activities.

Net cash used in the financing activities of our continuing operations was $202.9 million for fiscal year 2020, as compared to net cash provided by the financing activities of our continuing operations of $150.1 million for fiscal year 2019, an increase of $353.0 million in net cash used in financing activities.

The cash used in financing activities during fiscal year 2020 was principally a result of debt payments, net payments on other credit facilities, settlement of cash flow hedges, payments for acquisition-related contingent consideration, repurchases of our common stock pursuant to our equity incentive plans and payments of dividends.

During fiscal year 2020, our debt payments totaled $897.7 million which were partially offset by debt borrowings of $714.7 million.

This compares to debt payments of $1,692.5 million and payments of debt issuance costs of $9.9 million, which were partially offset by our debt borrowings of $1,599.4 million in fiscal year 2019.

During fiscal year 2019, payments of our senior debt were $530.3 million, which were more than offset by proceeds from the issuance of the 2029 Notes which were $847.2 million.

In addition, during fiscal year 2020, we had net payments on other credit facilities of $4.5 million as compared to $15.0 million in fiscal year 2019.

During fiscal year 2020, we paid $4.6 million for settlement of forward foreign exchange contracts as compared to $1.3 million in fiscal year 2019.

During fiscal year 2020,

we paid $10.4 million for acquisition-related contingent consideration as compared to $29.9 million in fiscal year 2019.

During fiscal year 2020, we repurchased 72,251 shares of our common stock to satisfy minimum statutory tax withholding obligations in connection with the vesting of restricted stock awards and restricted stock unit awards granted pursuant to our equity incentive plans and to satisfy obligations related to the exercise of stock options made pursuant to our equity incentive plans, for a total cost of $6.9 million.

Net cash provided by the financing activities of our continuing operations was $2,941.7 million for fiscal year 2021, as compared to net cash used in the financing activities of our continuing operations of $202.9 million for fiscal year 2020, an increase of $3,144.5 million in net cash used in financing activities.

The cash provided by financing activities during fiscal year 2021 was a result of proceeds from the sale of unsecured senior notes, proceeds from borrowings, proceeds from a term loan and proceeds from the issuance of common stock under stock plans.

During fiscal year 2021, proceeds from the sale of unsecured senior notes were $3,086.1 million, our proceeds from debt borrowings totaled $1,400.3 million and proceeds from a term loan were $500.0 million.

These were partially offset by payments on borrowings of $1,559.1 million, payments of senior unsecured notes of $339.6 million and debt issuance costs of $31.0 million during fiscal year 2021.

This compares to debt borrowings of $714.7 million, which were more than offset by debt payments of $897.7 million during fiscal year 2021.

Proceeds from the issuance of common stock under our stock plans were $25.1 million during fiscal year 2021, as compared to $37.7 million for fiscal year 2020.

This cash provided by financing activities during fiscal year 2021 was partially offset by repurchases of our common stock, payments of dividends, net payments on other credit facilities settlement of swap and settlement of cash flow hedges.

During fiscal year 2021, we repurchased 433,000 shares of common stock under the Repurchase Program and 71,248 shares of our common stock to satisfy minimum statutory tax withholding obligations in connection with the vesting of restricted stock awards and restricted stock unit awards granted pursuant to our equity incentive plans and to satisfy obligations related to the exercise of stock options made pursuant to our equity incentive plans, for a total cost of $73.1 million.

This compares to repurchases of 72,251 shares of our common stock pursuant to our equity incentive plans in fiscal year 2020, for a total cost of $6.9 million.

During fiscal year 2021, we paid $32.4 million in dividends as compared to $31.2 million for fiscal year 2020.

The cash used in financing activities during fiscal year 2020 was partially offset by proceeds from the issuance of common stock under stock plans of $37.7 million during fiscal year 2020, as compared to $19.7 million in fiscal year 2019.

During fiscal year 2021, we paid $14.3 million for settlement of a swap.

During fiscal year 2021, we had net payments on other credit facilities of $13.7 million as compared to $4.5 million for fiscal year 2020.

We paid $4.5 million in settlement of hedges during fiscal year 2021 as compared to $4.6 million for fiscal year 2020.

During fiscal year 2021, we paid $2.2 million for acquisition-related contingent consideration as compared to $10.4 million in fiscal year 2020.

Fiscal Year 2020 Compared to Fiscal Year 2019

Borrowing Arrangements

Senior Unsecured Revolving Credit Facility.

Our senior unsecured revolving credit facility provides for $1.0 billion of revolving loans that may be either US Dollar Base Rate loans or Eurocurrency Rate loans, as those terms are defined in the credit agreement, and has an initial maturity of September 17, 2024.

As of January 3, 2021, undrawn letters of credit in the aggregate amount of $11.0 million were treated as issued and outstanding when calculating the borrowing availability under the senior unsecured revolving credit facility.

As of January 3, 2021, we had $830.4 million available for additional borrowing under the facility.

We plan to use the senior unsecured revolving credit facility for general corporate purposes, which may include working capital, refinancing existing indebtedness, capital expenditures, share repurchases, acquisitions and strategic alliances.

The interest rates on the Eurocurrency Rate loans are based on the Eurocurrency Rate at the time of borrowing, plus a percentage spread based on the credit rating of our debt.

The interest rates on the US Dollar Base Rate loans are based on the US Dollar Base Rate at the time of borrowing, plus a percentage spread based on the credit rating of our debt.

The base rate is the higher of (i) the Federal Funds Rate (as defined in the credit agreement) plus 50 basis points (ii) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "prime rate," or (iii) the Eurocurrency Rate plus 1.00%.

The Eurocurrency margin as of January 3, 2021 was 101.5 basis points.

The weighted average Eurocurrency interest rate as of January 3, 2021 was 0.02%, resulting in a weighted average effective Eurocurrency Rate, including the margin, of 1.04%, which was the interest applicable to the borrowings outstanding as of January 3, 2021.

As of January 3, 2021, the senior unsecured revolving credit facility had outstanding borrowings of $158.6 million, and $2.6 million of unamortized debt issuance costs.

As of December 29, 2019, the senior unsecured revolving credit facility had $325.4 million of outstanding borrowings, and $3.4 million of unamortized debt issuance costs.

The credit agreement for the facility contains affirmative, negative and financial covenants and events of default.

The financial covenants include a debt-to-capital ratio that remains applicable for so long as our debt is rated as investment grade.

In the event that our debt is not rated as investment grade, the debt-to-capital ratio covenant is replaced with a maximum consolidated leverage ratio covenant and a minimum consolidated interest coverage ratio covenant.

We were in compliance with all applicable debt covenants as of January 3, 2021.

1.875% Senior Unsecured Notes due 2026.

On July 19, 2016, we issued €500.0 million aggregate principal amount of senior unsecured notes due in 2026 (the “2026 Notes”) in a registered public offering and received approximately €492.3 million of net proceeds from the issuance.

The 2026 Notes were issued at 99.118% of the principal amount, which resulted in a discount of €4.4 million.

The 2026 Notes mature in July 2026 and bear interest at an annual rate of 1.875%.

Interest on the 2026 Notes is payable annually on July 19th each year.

The proceeds from the 2026 Notes were used to pay in full the outstanding balance of our previous senior unsecured revolving credit facility.

As of January 3, 2021, the 2026 Notes had an aggregate carrying value of $604.7 million, net of $3.3 million of unamortized original issue discount and $2.8 million of unamortized debt issuance costs.

As of December 29, 2019, the 2026 Notes had an aggregate carrying value of $552.2 million, net of $3.5 million of unamortized original issue discount and $3.3 million of unamortized debt issuance costs.

Prior to April 19, 2026 (three months prior to their maturity date), we may redeem the 2026 Notes in whole at any time or in part from time to time, at our option, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2026 Notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest in respect to the 2026 Notes being redeemed, discounted on an annual basis, at the applicable Comparable Government Bond Rate (as defined in the indenture governing the 2026 Notes) plus 35 basis points;

plus, in each case, accrued and unpaid interest.

In addition, at any time on or after April 19, 2026 (three months prior to their maturity date), we may redeem the 2026 Notes, at our option, at a redemption price equal to 100% of the principal amount of the 2026 Notes due to be redeemed plus accrued and unpaid interest.

Upon a change of control (as defined in the indenture governing the 2026 Notes) and a contemporaneous downgrade of the 2026 Notes below investment grade, we will, in certain circumstances, make an offer to purchase the 2026 Notes at a price equal to 101% of their principal amount plus any accrued and unpaid interest.

0.6% Senior Unsecured Notes due in 2021.

On April 11, 2018, we issued €300.0 million aggregate principal amount of senior unsecured notes due in 2021 (the “2021 Notes”) in a registered public offering and received approximately €298.7 million of net proceeds from the issuance.

The 2021 Notes were issued at 99.95% of the principal amount, which resulted in a discount of €0.2 million.

As of January 3, 2021, the 2021 Notes had an aggregate carrying value of $366.2 million, net of $16,200 of unamortized original issue discount and $0.2 million of unamortized debt issuance costs.

As of December 29, 2019, the 2021 Notes had an aggregate carrying value of $334.2 million, net of $0.1 million of unamortized original issue discount and $1.1 million of unamortized debt issuance costs.

The 2021 Notes mature in April 2021 and bear interest at an annual rate of 0.6%.

Interest on the 2021 Notes is payable annually on April 9th each year.

Prior to the maturity date of the 2021 Notes, we may redeem them in whole at any time or in part from time to time, at our option, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2021 Notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest in respect to the 2021 Notes being redeemed, discounted on an annual basis, at the applicable Comparable Government Bond Rate (as defined in the indenture governing the 2021 Notes) plus 15 basis points;

plus, in each case, accrued and unpaid interest.

Upon a change of control (as defined in the indenture governing the 2021 Notes) and a contemporaneous downgrade of the 2021 Notes below investment grade, we will, in certain circumstances, make an offer to purchase the 2021 Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest.

3.3% Senior Unsecured Notes due in 2029.

On September 12, 2019, we issued $850.0 million aggregate principal amount of senior unsecured notes due in 2029 (the "2029 Notes”) in a registered public offering and received $847.2 million of net proceeds from the issuance.

The 2029 Notes were issued at 99.67% of the principal amount, which resulted in a discount of $2.8 million.

As of January 3, 2021, the 2029 Notes had an aggregate carrying value of $840.6 million, net of $2.5 million of unamortized original issue discount and $6.9 million of unamortized debt issuance costs.

As of December 29, 2019, the 2029 Notes had an aggregate carrying value of $839.9 million, net of $2.7 million of unamortized original issue discount and $7.4 million of unamortized debt issuance costs.

The 2029 Notes mature in September 2029 and bear interest at an annual rate of 3.3%.

Interest on the 2029 Notes is payable semi-annually on March 15th and September 15th each year.

Proceeds from the 2029 Notes were used to repay all outstanding borrowings under our previous senior unsecured revolving credit facility with the remaining proceeds used in the redemption of the 5% senior unsecured notes that were due in November 2021.

Prior to June 15, 2029 (three months prior to their maturity date), we may redeem the 2029 Notes in whole or in part, at our option, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2029 Notes to be redeemed, and (ii) the sum of the present values of the remaining scheduled payments of principal and interest in respect to the 2029 Notes being redeemed (not including any portion of such payments of interest accrued but unpaid as of the date of redemption) assuming that such 2029 Notes matured on June 15, 2029, discounted at the date of redemption on a semi-annual basis (assuming a 360-day year of twelve 30-day months), at the Treasury Rate (as defined in the indenture governing the 2029 Notes) plus 25 basis points, plus accrued and unpaid interest.

At any time on or after June 15, 2029 (three months prior to their maturity date), we may redeem the 2029 Notes, at our option, at a redemption price equal to 100% of the principal amount of the 2029 Notes to be redeemed plus accrued and unpaid interest.

Upon a change of control (as defined in the indenture governing the 2029 Notes) and a contemporaneous downgrade of the 2029 Notes below investment grade, each holder of 2029 Notes will have the right to require us to repurchase such holder's 2029 Notes for 101% of their principal amount, plus accrued and unpaid interest.

Other Debt Facilities.

Our other debt facilities include Euro-denominated bank loans with an aggregate carrying value of $17.0 million (or €13.9 million) and $23.8 million (or €21.3 million) as of January 3, 2021 and December 29, 2019, respectively.

These bank loans are primarily utilized for financing fixed assets and are required to be repaid in monthly or quarterly installments with maturity dates extending to 2028.

Of these bank loans, loans in the aggregate amount of $17.0 million bear fixed interest rates between 1.1% and 4.3% and a loan in the amount of $0.1 million bears a variable interest rate based on the Euribor rate plus a margin of 1.5%.

An aggregate amount of $4.8 million of the bank loans are secured by mortgages on real property and the remaining $12.2 million are unsecured.

Certain credit agreements for the unsecured bank loans include financial covenants which are based on an equity ratio or an equity ratio and minimum interest coverage ratio.

We were in compliance with all applicable debt covenants as of January 3, 2021.

In addition, we had secured bank loans in the aggregate amount of $6.1 million and $1.9 million as of January 3, 2021 and December 29, 2019, respectively.

The secured bank loans of $6.1 million bear fixed annual interest rates between 1.95% and 8.9% and are required to be repaid in monthly installments until 2027.

Our Board declared a regular quarterly cash dividend of $0.07 per share in each quarter of fiscal years 2020 and 2019, resulting in an annual dividend rate of $0.28 per share.

See Note 13, Debt, in the Notes to Consolidated Financial Statements for a detailed discussion of our borrowing arrangements.

Our Board of Directors (our "Board") declared a regular quarterly cash dividend of $0.07 per share in each quarter of fiscal years 2021 and 2020, resulting in an annual dividend rate of $0.28 per share.

At January 2, 2022, we had accrued $8.8 million for a dividend declared in October 2021 for the fourth quarter of fiscal year 2021 that was paid in February 2022.

1 unchanged sentence

In the future, our Board may determine to reduce or eliminate our common stock dividend in order to fund investments for growth, repurchase shares or conserve capital resources.

Contractual Obligations

The following table summarizes our contractual obligations at January 3, 2021 for continuing and discontinued operations.

Purchase commitments are minimal and have been excluded from this table:

Leases Senior Unsecured

2021 Notes (2)

2026 Notes (3)

2029 Notes (4)

Debt Facilities (5)

Tax Act Transition Tax Liability Unrecognized

Tax Benefits (7)

(In thousands)

2021 $ 48,986 $ — $ 367,060 $ 11,452 $ 28,050 $ 14,927 $ 32,424 $ 6,575 $ — $ 509,474

2022 40,097 — — 11,452 28,050 4,199 32,532 12,328 — 128,658

2023 30,044 — — 11,452 28,050 2,511 33,003 16,438 — 121,498

2024 26,667 158,595 — 11,452 28,050 1,397 33,807 20,547 — 280,515

2025 24,847 — — 11,452 28,050 240 33,768 — — 98,357

2026 and thereafter 90,518 — — 616,948 953,801 293 165,888 — — 1,827,448

Total $ 261,159 $ 158,595 $ 367,060 $ 674,208 $ 1,094,051 $ 23,567 $ 331,422 $ 55,888 $ — $ 2,965,950

____________________________

(1) The credit facility borrowings carry variable interest rates.

As of January 3, 2021, the senior unsecured revolving credit facility had a carrying value of $156.0 million.

(2) The 2021 Notes include interest obligations of $0.6 million.

As of January 3, 2021, the 2021 Notes had a carrying value of $366.2 million.

(3) The 2026 Notes include interest obligations of $63.5 million.

As of January 3, 2021, the 2026 Notes had a carrying value of $604.7 million.

(4) The 2029 Notes include interest obligations of $244.1 million.

As of January 3, 2021, the 2029 Notes had a carrying value of $840.6 million.

(5) The other debt facilities include interest obligations of $0.4 million.

As of January 3, 2021, the other debt facilities had a carrying value of $23.2 million.

(6) Employee benefit payments only include obligations through fiscal year 2030.

(7) We do not expect to cash settle any uncertain tax positions during fiscal year 2021.

We have excluded $38.8 million related to uncertain tax positions, as we cannot make a reasonably reliable estimate of the amount and period of related future payments.

As of January 3, 2021, we may have to pay the former shareholders of certain of our acquisitions contingent consideration of up to $7.3 million.

The table above does not reflect any of these obligations as the timing and amounts are uncertain.

For further information related to our contingent consideration obligations, see Note 22 to our consolidated financial statements included in this annual report on Form 10-K.

Capital Expenditures

During fiscal year 2021, we expect to invest an amount for capital expenditures similar to that in fiscal year 2020, primarily to introduce new products, to improve our operating processes, to shift the production capacity to lower cost

locations, and to develop information technology.

During fiscal year 2022, we expect to invest an amount for capital expenditures similar to that in fiscal year 2021, primarily to introduce new products, to improve our operating processes, to shift the production capacity to lower cost locations, and to develop information technology.

We expect to use our available cash and internally generated funds to fund these expenditures.

1 unchanged sentence

At January 2, 2022, we had cash and cash equivalents of $618.3 million, of which $526.3 million was held by our non-U.S.

subsidiaries, and we had $830.4 million of additional borrowing capacity available under a senior unsecured revolving credit facility.

subsidiaries, and we had $1.5 billion of additional borrowing capacity available under a senior unsecured revolving credit facility.

We had no other liquid investments at January 2, 2022.

6 unchanged sentences

using nontaxable returns of capital, distributions of previously taxed income, as well as dividends, where the related income tax cost is managed efficiently.

We have accrued tax expense on the unremitted earnings of foreign subsidiaries as required by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) and also where the foreign earnings are not considered permanently reinvested.

In accordance with the Tax Act, we are making scheduled annual cash payments on our accrued transition tax.

The tax cost and related tax payments are not expected to be material to the execution of our business, investment and acquisition strategies.

On July 23, 2018, our Board of Directors (the "Board") authorized us to repurchase shares of common stock for an aggregate amount up to $250.0 million under a stock repurchase program (the "Repurchase Program").

The Repurchase Program expired on July 23, 2020, and no shares remain available for repurchase under the Repurchase Program due to its expiration.

On July 31, 2020, the Board authorized us to repurchase shares of common stock for an aggregate amount up to $250.0 million under a new stock repurchase program (the "New Repurchase Program").

The New Repurchase Program will expire on July 27, 2022 unless terminated earlier by the Board and may be suspended or discontinued at any time.

During fiscal year 2020, we had no stock repurchases under either the Repurchase Program or the New Repurchase Program.

As of January 3, 2021, $250.0 million remained available for aggregate repurchases of shares under the New Repurchase Program.

Subsequent to fiscal year 2020, we repurchased 233,000 shares of common stock under the New Repurchase Program at an aggregate cost of $33.6 million.

Prior to enactment of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), we did not provide deferred income tax expense on the cumulative undistributed earnings of our international subsidiaries.

At December 31, 2017, we accrued for a one-time transition tax expense of $85.0 million on our unremitted foreign earnings in accordance with the Tax Act.

Treasury subsequently issued regulations on the Tax Act and we recorded tax expense (benefit) of $2.7 million and $(4.6) million during fiscal years 2019 and 2018, respectively.

We continue to make our scheduled tax payments associated with this one-time transition tax expense accrual.

As of January 2, 2022, we evaluated our undistributed foreign earnings and identified approximately $1.2 billion in earnings that we no longer considered indefinitely reinvested.

We intend to begin repatriating such earnings to the U.S., in whole or in part, during fiscal year 2022.

In doing so, we have recorded a provision of approximately $37.1 million for the U.S.

federal, U.S.

state and non-U.S.

taxes that would fall due when such earnings are repatriated.

No additional income tax expense has been provided for any remaining undistributed foreign earnings, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested.

On July 31, 2020, our Board authorized us to repurchase shares of common stock for an aggregate amount up to $250.0 million under a stock repurchase program (the "Repurchase Program").

The Repurchase Program will expire on July 27, 2022 unless terminated earlier by our Board and may be suspended or discontinued at any time.

During fiscal year 2021, we repurchased 433,000 shares of common stock under the Repurchase Program at an aggregate cost of $62.6 million.

As of January 2, 2022, $187.4 million remained available for aggregate repurchases of shares under the Repurchase Program.

In addition, our Board has authorized us to repurchase shares of common stock to satisfy minimum statutory tax withholding obligations in connection with the vesting of restricted stock awards and restricted stock unit awards granted pursuant to our equity incentive plans and to satisfy obligations related to the exercise of stock options made pursuant to our equity incentive plans.

During the fiscal year 2020, we repurchased 72,251 shares of common stock for this purpose at an aggregate cost of $6.9 million.

During fiscal year 2021, we repurchased 71,248 shares of common stock for this purpose at an aggregate cost of $10.5 million.

During fiscal year 2020, we repurchased 72,251 shares of common stock for this purpose at an aggregate cost of $6.9 million.

The repurchased shares have been reflected as additional authorized but unissued shares, with the payments reflected in common stock and capital in excess of par value.

Any repurchased shares will be available for use in connection with corporate programs.

If we continue to repurchase shares, the New Repurchase Program will be funded using our existing financial resources, including cash and cash equivalents, and our existing senior unsecured revolving credit facility.

Subsequent to fiscal year 2020, we reached an agreement with Oxford Immunotec Global PLC (“Oxford Immunotec”) on terms under which we agreed to acquire Oxford Immunotec.

It is intended that the acquisition will be implemented by means of a U.K.

High Court of Justice-sanctioned scheme of arrangement under Part 26 of the U.K.

Companies Act 2006 between Oxford Immunotec and its shareholders (the “Scheme”).

Under the terms of the acquisition, Oxford Immunotec shareholders will be entitled to receive $22 in cash for each outstanding ordinary share.

The terms of the acquisition value Oxford Immunotec’s entire issued and to be issued ordinary share capital at approximately $591.0 million.

The Scheme has been approved by the shareholders of Oxford Immunotec.

Subject to the satisfaction of other customary closing conditions, we currently anticipate that the transaction will close later this month.

The acquisition will be funded using our existing financial resources, including cash and cash equivalents, and our existing senior unsecured revolving credit facility.

If we continue to repurchase shares, the Repurchase Program will be funded using our existing financial resources, including cash and cash equivalents, and our existing senior unsecured revolving credit facility.

As of January 2, 2022, we may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $108.4 million.

As of January 2, 2022, we have recorded contingent consideration obligations of $58.0 million, of which $1.3 million was recorded in accrued expenses and other current liabilities, and $56.7 million was recorded in long-term liabilities.

The expected maximum earnout period for acquisitions with open contingency periods does not exceed 6.9 years from January 2, 2022, and the remaining weighted average expected earnout period at January 2, 2022 was 5.4 years.

Distressed global financial markets could adversely impact general economic conditions by reducing liquidity and credit availability, creating increased volatility in security prices, widening credit spreads and decreasing valuations of certain investments.

The widening of credit spreads may create a less favorable environment for certain of our businesses and may affect the fair value of financial instruments that we issue or hold.

Increases in credit spreads, as well as limitations on the availability of credit at rates we consider to be reasonable, could affect our ability to borrow under future potential facilities on a secured or unsecured basis, which may adversely affect our liquidity and results of operations.

Increases in credit spreads, as well as limitations on the

availability of credit at rates we consider to be reasonable, could affect our ability to borrow under future potential facilities on a secured or unsecured basis, which may adversely affect our liquidity and results of operations.

In difficult global financial markets, we may be forced to fund our operations at a higher cost, or we may be unable to raise as much funding as we need to support our business activities.

5 unchanged sentences

We expect to use existing cash and external sources to satisfy future contributions to our pension plans.

We are conducting a number of environmental investigations and remedial actions at our current and former locations, and are subject to various claims, legal proceedings and investigations covering a wide range of matters that arise in the ordinary course of our business activities.

Although we have established accruals for potential losses that we believe are probable and reasonably estimable, in our opinion, based on our review of the information available at this time, the total cost of resolving these contingencies at January 2, 2022 should not have a material adverse effect on our consolidated financial statements included in this annual report on Form 10-K.

However, each of these matters is subject to uncertainties, and it is possible that some of these matters may be resolved unfavorably to us.

See “Business—Environmental Matters ” above and Note 16, Contingencies, in the Notes to Consolidated Financial Statements for a discussion of these matters and proceedings.

Effects of Recently Issued and Adopted Accounting Pronouncements

2 unchanged sentences

The preparation of consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, warranty costs, bad debts, inventories, accounting for business combinations and dispositions, long-lived assets, pensions and other postretirement benefits, restructuring, income taxes, contingencies and litigation.

On an ongoing basis, we evaluate our estimates, including those related to accounting for business combinations, long-lived assets, including goodwill and other intangibles and employee compensation and benefits.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

1 unchanged sentence

We believe the following critical accounting policies affect our more significant judgments and estimates used in preparation of our consolidated financial statements.

Revenue recognition.

We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations.

We recognize revenue in an amount that reflects the consideration we expect to receive in exchange for the promised products or services when a performance obligation is satisfied by transferring control of those products or services to customers.

Taxes that are collected by us from a customer and assessed by a governmental authority, that are both imposed on and concurrent with a specific revenue-producing transaction, are excluded from revenue.

The majority of our sales relate to specific manufactured products or units rather than long-term customized projects, therefore we generally do not experience significant changes in original estimates.

Further, we have not experienced any significant refunds or promotional allowances that require significant estimation.

Warranty costs .

We provide for estimated warranty costs for products at the time of their sale.

Warranty liabilities are estimated using expected future repair costs based on historical labor and material costs incurred during the warranty period.

Allowances for doubtful accounts.

Prior to December 30, 2019, we maintained allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments.

Beginning on December 30, 2019, we maintain an allowance for current expected credit loss on trade receivables that, when deducted from the amortized cost basis of the trade receivables, presents the net amount expected to be collected on trade receivables.

Under the new model, we segment our receivables and contract assets based on days past due and record an allowance for current expected credit losses using average rates applied against each account's applicable aggregate balance for each aging bucket.

We establish the average rates based on consideration of the actual credit loss experience over the prior 3-year period, recent collection trends, current economic conditions and reasonable expectations of future payment delinquency.

Therefore, if the economic conditions and financial condition of our customers were to deteriorate beyond our estimates, we may have to increase our allowance for current expected credit loss.

This would reduce our earnings.

Accounts are written-off only when all methods of recovery have been exhausted.

Inventory valuation.

We value inventory at the lower of cost or market.

Inventories are accounted for using the first-in, first-out method.

We periodically review these values to ascertain that market value of the inventory continues to exceed its recorded cost.

Generally, reductions in value of inventory below cost are caused by our maintenance of stocks of products in excess of demand, or technological obsolescence of the inventory.

We regularly review inventory quantities on hand and, when necessary, record provisions for excess and obsolete inventory based on either our estimated forecast of product demand and production requirements, or historical trailing usage of the product.

If our sales do not materialize as planned or at historic

levels, we may have to increase our reserve for excess and obsolete inventory.

This would reduce our earnings.

If actual market conditions are more favorable than anticipated, inventory previously written down may be sold, resulting in lower costs of sales and higher income from operations than expected in that period.

Business combinations.

1 unchanged sentence

Acquisition costs are expensed as incurred and recorded in selling, general and administrative expenses;

previously held equity interests are valued at fair value upon the acquisition of a controlling interest;

IPR&D is recorded at fair value as an intangible asset at the acquisition date;

restructuring costs associated with a business combination are expensed subsequent to the acquisition date;

2 unchanged sentences

All changes that do not qualify as measurement period adjustments are also included in current period earnings.

The accounting for business combinations requires estimates and judgment as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair value for assets acquired and liabilities assumed.

For intangible assets, we normally utilize the "income method" which incorporates the forecast of all the expected future net cash flows attributable to the subject intangible asset, adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams.

Depending on the asset valued, the key assumptions included one or more of the following:

(1) future revenue growth rates, (2) future gross margin, (3) future selling, general and administrative expenses, (4) royalty rates, (5) customer attrition rates, and (6) discount rates.

If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of finite-lived intangible assets, or the recognition of additional consideration which would be expensed.

2 unchanged sentences

We carry a variety of long-lived assets on our consolidated balance sheets including property and equipment, operating lease right of use assets, investments, identifiable intangible assets, and goodwill.

We periodically review the carrying value of all of these assets based, in part, upon current estimated market values and our projections of anticipated future cash flows.

We periodically review the carrying value of all of these assets based, in part, upon current estimates of fair values and our projections of anticipated future cash flows.

We undertake this review (i) on an annual basis for assets such as goodwill and non-amortizing intangible assets and (ii) on a periodic basis for other long-lived assets when facts and circumstances suggest that cash flows related to those assets may be diminished.

Any impairment charge that we record reduces our earnings.

The test consists of the comparison of the fair value to the carrying value of the reporting unit to determine if the carrying value exceeds the fair value.

For goodwill, the test consists of the comparison of the fair value to the carrying value of the reporting unit to determine if the carrying value exceeds the fair value.

If the carrying value of the reporting unit exceeds its fair value, an impairment loss in an amount equal to that excess is recognized up to the amount of goodwill.

2 unchanged sentences

We completed the annual goodwill impairment test using a measurement date of January 4, 2021, and concluded that there was no goodwill impairment.

At January 1, 2020, the fair value exceeded the carrying value by more than 20.0% for each reporting unit, except for our Meizheng Group reporting unit.

At January 4, 2021, the fair value exceeded the carrying value by more than 20.0% for each reporting unit, except for our Tulip reporting unit, which had a fair value that was between 10% and 20% more than its carrying value.

The range of the long-term terminal growth rates for the reporting units was 3.0% to 5.0% for the fiscal year 2021 impairment analysis.

The range for the discount rates for the reporting units was 8.0% to 12.5%.

Keeping all other variables constant, a 10.0% change in any one of these input assumptions for the various reporting units, except for our Meizheng Group reporting unit, would still allow us to conclude that there was no impairment of goodwill.

The fair value of our Meizheng Group reporting unit approximated its carrying value given that the reporting unit was a relatively new acquisition.

At January 4, 2021, our Tulip reporting unit, which had a goodwill balance of $77.8 million at January 3, 2021, had a fair value that was between 10% and 20% more than its carrying value.

Tulip is at increased risk of an impairment charge given its ongoing weakness due to the impact of COVID-19.

Despite the increased risk associated with this reporting unit, we do not believe there will be a significant change in the key estimates or assumptions driving the fair value of this reporting unit that would lead to a material impairment charge.

We consistently employed the income approach to estimate the current fair value when testing for impairment of goodwill.

Keeping all other variables constant, a 10.0% change in any one of these input assumptions for the vari ous reporting units, except for our Tulip reporting unit, would still allow us to conclude that there was no impairment of goodwill.

At January 2, 2022, the operating performance of our Tulip reporting unit exceeded the original forecast and the forecast for this reporting unit no longer indicates any sensitivity that would lead to a material impairment charge.

We consistently employ the income approach to estimate the current fair value when testing for impairment of goodwill.

A number of significant assumptions and estimates are involved in the application of the income approach to forecast operating cash flows, including markets and market share, sales volumes and prices, costs to produce, tax rates, capital spending, discount rates and working capital changes.

4 unchanged sentences

While we believe that our estimates of current value are reasonable, if actual results differ from the estimates and judgments used including such items as future cash flows and the volatility inherent in markets which we serve, impairment charges against the carrying value of those assets could be required in the future.

Non-amortizing intangibles are also subject to an annual impairment test.

We consistently employed the relief from royalty model to estimate the current fair value when testing for impairment of non-amortizing intangible asset.

The impairment

test consists of a comparison of the fair value of the non-amortizing intangible asset with its carrying amount.

If the carrying amount of a non-amortizing intangible asset exceeds its fair value, an impairment loss in an amount equal to that excess is recognized up to the amount of the amortizing intangible asset.

In addition, we evaluate the remaining useful life of our non-amortizing intangible asset at least annually to determine whether events or circumstances continue to support an indefinite useful life.

If events or circumstances indicate that the useful life of our non-amortizing intangible asset is no longer indefinite, the asset will be tested for impairment.

This intangible asset will then be amortized prospectively over their estimated remaining useful life and accounted for in the same manner as other intangible assets that are subject to amortization.

We performed our annual impairment testing as of January 1, 2020, and concluded that there was no impairment of the non-amortizing intangible asset.

An assessment of the recoverability of amortizing intangible assets takes place when events have occurred that may give rise to an impairment.

No such events occurred during fiscal year 2020.

Employee compensation and benefits.

5 unchanged sentences

Actuarial gains and losses are measured annually as of the calendar month-end that is closest to our fiscal year end and accordingly will be recorded in the fourth quarter, unless we are required to perform an interim remeasurement.

We recognized losses of $18.0 million and $26.1 million in fiscal years 2020 and 2019, respectively, for our retirement and postretirement benefit plans, which include the charge or benefit for the mark-to-market adjustment for the postretirement benefit plans, which was recorded in the fourth quarter of each fiscal year.

The loss or income related to the mark-to-market adjustment on postretirement benefit plans was a pre-tax loss of $25.4 million in fiscal year 2020 and $31.2 million in fiscal year 2019.

We recognized a gain of $30.9 million in fiscal year 2021 and a loss of $18.0 million in fiscal year 2020, for our retirement and postretirement benefit plans, which include the charge or benefit for the mark-to-market adjustment for the benefit plans, which was recorded in the fourth quarter of each fiscal year.

The loss or income related to the mark-to-market adjustment on benefit plans was a pre-tax gain of $24.7 million in fiscal year 2021 and a pre-tax loss of $25.4 million in fiscal year 2020.

We expect income of approximately $5.4 million in fiscal year 2022 for our retirement and postretirement benefit plans, excluding the charge for or benefit from the mark-to-market adjustment.

5 unchanged sentences

We are required to make assumptions regarding such variables as the expected long-term rate of return on assets, the discount rate applied and mortality assumptions, to determine service cost and interest cost, in order to arrive at expected pension income or expense for the year.

Beginning in fiscal year 2016, the approach we use to calculate the service and interest components of net periodic benefit cost for certain non-U.S.

benefit plans was changed to provide a more precise measurement of service and interest costs.

Prior to fiscal year 2016, we calculated these service and interest components utilizing a single weighted-average discount rate derived from a yield curve used to measure the benefit obligation at the beginning of the period.

Beginning in fiscal year 2016, we have elected to utilize an approach that discounts the individual expected cash flows using the applicable spot rates derived from a yield curve over the projected cash flow period.

As of January 3, 2021, we estimate the expected long-term rate of return on assets in our pension and other postretirement benefit plans in the United States to be 7.25% and to be 2.10% for all plans outside the United States.

In addition, as of January 3, 2021, we estimate the discount rate for our pension and other postretirement benefit plans in the United States to be 2.21% and to be 0.92% for all plans outside the United States.

During fiscal year 2019, the Society of Actuaries issued an updated projection scale, MP-2019, which incorporated an additional year (2017) of U.S.

population data and reduced the life expectancy used to determine the projected benefit obligation.

We adopted MP-2019 as of December 30, 2019.

The adoption of MP-2019 resulted in a $4.4 million decrease to the projected benefit obligation at December 29, 2019.

During fiscal year 2020, the Society of Actuaries issued an updated projection scale, MP-2020, which incorporated an additional year (2018) of U.S.

population data and made a few adjustments to the long-term rate of mortality improvement assumed.

We adopted MP-2020 as of January 3, 2021.

The adoption of MP-2020 resulted in a $2.7 million decrease to the projected benefit obligation at January 3, 2021.

The changes to the projected benefit obligations due to the adoption of the new projection scale are included within "Actuarial loss (gain)" in the Change in Benefit Obligations for fiscal years 2020 and 2019 above.

We have analyzed the rates of return on assets used and determined that these rates are reasonable based on the plans’ historical performance relative to the overall markets in the countries where we invest the assets, as well as our current expectations for long-term rates of returns for our pension and other postretirement benefit assets.

Our management will continue to assess the expected long-term rate of return on plan assets assumptions for each plan based on relevant market conditions, and will make adjustments to the assumptions as appropriate.

Discount rate assumptions have been, and continue to

be, based on the prevailing market long-term interest rates corresponding with expected benefit payments at the measurement date.

If any of our assumptions were to change as of January 3, 2021, our pension plan expenses would also change.

We use discount rates for each individual plan based upon the expected cash flows using the applicable spot rates derived from a yield curve over the projected cash flow period.

If any of our assumptions were to change as of January 2, 2022, our pension plan expenses would also change as follows:

Increase (Decrease) at

3 unchanged sentences

-0.25 13,639 7,773

Rate of return on pension plan assets +1.00 (2,048) (2,687)

-1.00 2,048 2,687

Postretirement medical plans discount rate +0.25 N/A (90)

Rate of return on postretirement medical plan assets +1.00 N/A (220)

-1.00 N/A 220

We have reduced the volatility in our healthcare costs provided to our retirees by adopting a defined dollar plan feature in fiscal year 2001.

Under the defined dollar plan feature, our total annual liability for healthcare costs to any one retiree is limited to a fixed dollar amount, regardless of the nature or cost of the healthcare needs of that retiree.

Our maximum future liability, therefore, cannot be increased by future changes in the cost of healthcare.

Restructuring activities.

Our consolidated financial statements detail specific charges relating to restructuring activities as well as the actual spending that has occurred against the resulting accruals.

Our pre-tax restructuring charges are estimates based on our preliminary assessments of (i) severance benefits to be granted to employees, based on known benefit formulas and contractual agreements, (ii) costs of terminating contracts in connection with certain disposal activities before the end of their terms and the costs that will continue to be incurred for the remaining terms without economic benefit to us , (iii) costs to relocate facilities and (iv) impairment of assets as discussed above under “Value of long-lived assets, including goodwill and other intangibles.” Because these accruals are estimates, they are subject to change as a result of deviations from initial restructuring plans or subsequent information that may come to our attention.

For example, actual severance costs may be less than anticipated if employees voluntarily leave prior to the time at which they would be entitled to severance, or if anticipated legal hurdles in foreign jurisdictions prove to be less onerous than expected.

In addition, unanticipated successes or difficulties in terminating contractual obligations may lead to changes in estimates.

When such changes in estimates occur, they are reflected in our consolidated financial statements on our consolidated statements of operations line entitled “restructuring and other costs, net.”

Dispositions.

When we record the disposition of an asset or discontinuance of an operation, which meets the criteria to be reported as a discontinued operation, we make an estimate relative to the amount we expect to realize on the sale or disposition.

This estimate is based on a variety of factors, including current interest in the market, alternative markets for the assets, and other relevant factors.

If anticipated proceeds are less than the current carrying amount of the asset or operation, we record a loss.

If anticipated proceeds are greater than the current carrying amount of the asset or operation, we recognize a gain net of expected contingencies when the transaction has been consummated.

Accordingly, we may realize amounts different than were first estimated.

Any such changes decrease or increase current earnings.

During the fiscal year ended January 3, 2021, we had no disposition of discontinued operations.

Income taxes.

Our business operations are global in nature, and we are subject to taxes in numerous jurisdictions.

Tax laws and tax rates vary substantially in these jurisdictions and are subject to change given the political and economic climate in those countries.

We report and pay income tax based on operational results and applicable law.

Our tax provision contemplates tax rates currently in effect to determine our current tax provision as well as enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled to determine our deferred tax provision.

Any significant fluctuation in rates or changes in tax laws could cause our estimates of taxes we anticipate either paying or recovering in the future to change.

Such changes could lead to either increases or decreases in our effective tax rate.

The Tax Act made broad and complex changes to the U.S.

Internal Revenue Code, which included reducing the corporate income tax rate from 35% to 21% and implementing a modified territorial tax system that includes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries.

The end of the measurement period for purposes of Staff

Accounting Bulletin No.

118 was December 22, 2018.

We have completed the analysis based on legislative updates relating to the Tax Act currently available and have recorded the impact in tax expense from continuing operations.

We are subject to the Global Intangible Low Tax Income ("GILTI") tax rules that are part of the modified territorial tax system imposed by the Tax Act.

GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on future U.S.

inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into our measurement of deferred taxes (the “deferred method”).

We adopted the period cost method and thus have not recorded any potential deferred tax effects related to GILTI in our financial statements for the fiscal year ended January 3, 2021.

Significant judgment is required in determining our worldwide provision for income taxes and recording the related tax assets and liabilities.

In the ordinary course of our business, there are operational decisions, transactions, facts and circumstances, and calculations for which the ultimate tax determination is not certain.

Furthermore, our tax positions are periodically subject to challenge by taxing authorities throughout the world.

Every quarter we review our tax positions in each significant taxing jurisdiction in the process of evaluating our unrecognized tax benefits.

Adjustments are made to our unrecognized tax benefits when:

(i) facts and circumstances regarding a tax position change, causing a change in our judgment regarding that tax position;

(ii) a tax position is effectively settled with a tax authority at a differing amount;

and/or (iii) the statute of limitations expires regarding a tax position.

Any significant impact as a result of changes in underlying facts, law, tax rates, tax audit, or review could lead to adjustments to our income tax expense, our effective tax rate, or our cash flow.

Additionally, we have established valuation allowances against a variety of deferred tax assets, including state net operating loss carryforwards, state income tax credit carryforwards, and certain foreign tax attributes.

Valuation allowances take into consideration our ability to use these deferred tax assets and reduce the value of such items to the amount that is deemed more likely than not to be recoverable.

In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and results of recent operations.

In projecting future taxable income, we begin with historical results adjusted for the results of discontinued operations and incorporate assumptions about the future pretax operating income adjusted for items that do not have tax consequences.

These assumptions about future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying business.

Changes in our assumptions regarding the appropriate amount for valuation allowances could result in the increase or decrease in t he valuation allowance, with a corresponding charge or benefit to our tax provision.

Prior to enactment of the Tax Act, we did not provide deferred income tax expense on the cumulative undistributed earnings of our international subsidiaries.

The Tax Act required us to accrue a one-time transition tax on the unremitted earnings of foreign subsidiaries.

At December 31, 2017, we recorded an income tax expense of $85.0 million in continuing operations in accordance with the Tax Act.

Treasury issued regulations in 2019 and accordingly we refined our calculations of the one-time transition tax and recorded a tax expense (benefit) of $2.7 million and $(4.6) million during fiscal years 2019 and 2018, respectively.

At the end of fiscal year 2020, we evaluated our undistributed foreign earnings and identified certain earnings that we no longer consider indefinitely reinvested and therefore recognized $1.6 million of income tax expense during the year.

Our intent is to continue to reinvest the remaining undistributed earnings of our international subsidiaries indefinitely.

No additional deferred income taxes have been provided for any remaining undistributed foreign earnings, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested.

However, should we change our business plans in the future and decide to repatriate a portion of these earnings to one of our U.S.

subsidiaries, we will recognize additional income tax liabilities.

As of January 3, 2021, we have approximately $1.5 billion of foreign earnings that we have the intent and ability to keep invested outside the U.S.

indefinitely and for which no additional incremental U.S.

tax cost has been provided.

It is not practicable to calculate the unrecognized deferred tax liability related to such incremental tax costs on those earnings.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis