What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-27 compared with 2023-03-01 · 392 added, 473 removed, 1165 unchanged (43% of the section changed)

Financial Statements and Supplemental Data

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of PerkinElmer, Inc.

To the Stockholders and the Board of Directors of Revvity, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of PerkinElmer, Inc.

and subsidiaries (the “Company”) as of January 1, 2023 and January 2, 2022 and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended January 1, 2023 and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 1, 2023 and January 2, 2022, and the results of its operations and its cash flows for each of the three years in the period ended January 1, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of January 1, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2023 expressed an unqualified opinion on the Company’s internal control over financial reporting.

We have audited the accompanying consolidated balance sheets of Revvity, Inc.

and subsidiaries (the “Company”) as of December 31, 2023 and January 1, 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and January 1, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2024, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Discontinued Operations - Refer to Notes 1 and 4 to the financial statements

Discontinued Operations — Gain on Sale — Refer to Notes 4 and 20 to the financial statements

Critical Audit Matter Description

In August 2022, the Company entered into a definitive agreement to sell certain assets and the equity interests of certain entities constituting the Analytical, Food and Enterprise Services businesses (the “Business”).

At that time, management determined that the proposed sale met the criteria for the Business to be classified as held-for-sale and the results of operations and cashflows of the Business was presented as discontinued operations for all periods presented in accordance with Accounting Standard Codification 205-20, Discontinued Operations (“ASC 205-20”).

The net assets of the Business were $ 1.42 billion and $ 1.40 billion as of January 1, 2023 and January 2, 2022, respectively.

Given the level of operational and financial integration between the Business and the continuing operations of the Company, auditing the segregation of assets and liabilities of the Business and the identification of the results of operation and cashflows of the Business required both extensive audit effort and a high degree of auditor judgment.

On March 13, 2023, the Company completed the previously announced sale of certain assets and the equity interests of certain entities constituting the Company’s Applied, Food and Enterprise Services businesses (the “Business”).

The Company received cash proceeds of $ 2.13 billion and is entitled to two elements of additional consideration that become payable upon the resolution of certain events.

First, the Company is entitled to proceeds of $ 75.0 million as consideration for the Company’s ceasing use of the PerkinElmer brand and related trademarks and transferring them to the purchaser (“Brand Sale”).

This consideration is expected to be received in installments through the first half of 2025.

The Company is also entitled to proceeds of up to $ 150.0 million that is contingent on the proceeds that the purchaser and its affiliates receive on a subsequent sale or other capital event related to the Business (“Contingent Gain”).

In order to determine the gain on disposal related to the Business, the Company was required to make significant judgments related to the accounting treatment of the Brand Sale and the Contingent Gain, which included assessing the appropriateness of including the future payments related to the Brand Sale and Contingent Gain in the proceeds at closing and measuring the fair value of the Contingent Gain.

As a result, auditing the recognition of the Brand Sale and the recognition and measurement of the Contingent Gain required a high degree of auditor judgment and increased effort, including the involvement of specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the identification and measurement of the net assets of the Business and the related results of operations and cashflows presented as discontinued operations included the following, among others:

• We tested the effectiveness of controls over the identification of the net assets, results of operations and cash flows included in the Company’s discontinued operations presentation.

• We obtained and read the purchase and sale agreement for the proposed sale and compared the terms of that agreement to the identification of the assets and liabilities included in the disposal group.

• We assessed the Company’s identification of assets and liabilities and the related operations and cash flows of the Business by testing the completeness and accuracy of the Company’s accounting data and schedules that segregate the Business from the continuing operations of the Company.

• We assessed the presentation and disclosures related to the discontinued operations to ensure proper application of ASC 205-20.

Our audit procedures related to the accounting treatment for the recognition of the Brand Sale and the recognition and measurement of the Contingent Gain included the following, among others:

We tested the effectiveness of management’s controls over the accounting conclusions reached and the recognition and measurement of the Brand Sale and Contingent Gain.

We obtained and read the purchase and sale agreement and other documents related to the sale of the Business in evaluating the reasonableness of the Company’s recognition of the Brand Sale and the Contingent Gain.

With the assistance of professionals in our firm having expertise in divestiture accounting, we read and evaluated the Company’s accounting treatment for the inclusion of the Brand Sale and Contingent Gain in the proceeds from the sale of the Business at the closing date.

With the assistance of our fair value specialists, we confirmed the acceptability of the valuation methodology selected, and we developed an independent estimate of the fair value of the Contingent Gain and compared our estimate to the recorded amount.

/s / DELOITTE & TOUCHE LLP

Boston, Massachusetts

March 1, 2023

February 27, 2024

We have served as the Company’s auditor since 2002.

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Income from continuing operations 179,503 512,676 889,436

Income from discontinued operations before income taxes 73,604 76,304 106,292

Loss on disposition of discontinued operations before income taxes — — ( 76 )

Provision for income taxes on discontinued operations 17,101 22,583 8,889

Income from discontinued operations 513,591 56,503 53,721

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Net income $ 693,094 $ 569,179 $ 943,157

Other comprehensive (loss) income

Foreign currency translation adjustments, net of tax ( 284,854 ) ( 130,873 ) 169,500

Other comprehensive income (loss)

Foreign currency translation adjustments, net of income taxes:

Amount recognized in other comprehensive income 80,172 ( 284,854 ) ( 130,873 )

Amounts recognized in discontinued operations 90,814 — —

Net foreign currency translation adjustments, net of income taxes 170,986 ( 284,854 ) ( 130,873 )

Unrecognized prior service credit (cost), net of tax — 44 ( 95 )

Unrealized gains (losses) on securities, net of tax 5 237 ( 16 )

Other comprehensive (loss) income ( 284,805 ) ( 130,731 ) 167,685

Unrealized (losses) gains on securities, net of tax ( 181 ) 5 237

Other comprehensive income (loss) 170,805 ( 284,805 ) ( 130,731 )

Comprehensive income $ 863,899 $ 284,374 $ 812,426

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Cash and cash equivalents $ 913,163 $ 454,358

Marketable securities 689,916 —

Accounts receivable, net 632,811 612,780

Inventories 405,462 425,890

Inventories, net 428,062 405,462

Other current assets 337,139 122,254

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Property, plant and equipment, net 509,654 482,950

Operating lease right-of-use assets 188,351 164,040

Operating lease right-of-use assets, net 155,083 188,351

Intangible assets, net 3,022,321 3,377,174

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Other assets, net 342,966 311,054

Long-term assets of discontinued operations — 1,144,168

Total assets $ 13,564,665 $ 14,129,855

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Operating lease liabilities 132,747 169,968

Long-term liabilities of discontinued operations — 91,702

Total liabilities 5,691,926 6,746,979

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Common stock—$1 par value per share, authorized 300,000,000 shares;

issued and outstanding 126,300,000 and 126,241,000 shares at January 1, 2023 and January 2, 2022, respectively 126,300 126,241

issued and outstanding 123,426,000 and 126,300,000 shares at December 31, 2023 and January 1, 2023, respectively 123,426 126,300

Capital in excess of par value 2,416,793 2,753,055

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(In thousands)

Balance, December 30, 2019 111,140 $ 111,140 $ 90,357 $ 2,811,973 $ ( 199,646 ) $ 2,813,824

Impact of adopting ASU 2016-13 — — — ( 1,328 ) — ( 1,328 )

Balance, January 3, 2021 112,090 $ 112,090 $ 148,101 $ 3,507,262 $ ( 31,961 ) $ 3,735,492

Net income — — — 943,157 — 943,157

Other comprehensive income — — — — 167,685 167,685

Other comprehensive loss — — — — ( 130,731 ) ( 130,731 )

Dividends — — — ( 33,245 ) — ( 33,245 )

Issuance of common stock for business combination, net of issuance costs 14,067 14,067 2,624,077 — — 2,638,144

Exercise of employee stock options 358 358 24,762 — — 25,120

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Dividends — — — ( 35,335 ) — ( 35,335 )

Issuance of common stock for business combination, net of issuance costs 14,067 14,067 2,624,077 — — 2,638,144

Exercise of employee stock options 195 195 13,919 — — 14,114

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Issuance of common stock for long-term incentive program 326 326 44,235 — — 44,561

Stock compensation — — 6,251 — — 6,251

Stock-based compensation — — 10,383 — — 10,383

Balance, January 1, 2023 126,300 $ 126,300 $ 2,753,055 $ 4,951,018 $ ( 447,497 ) $ 7,382,876

Net income — — — 693,094 — 693,094

Other comprehensive loss — — — — ( 284,805 ) ( 284,805 )

Other comprehensive income — — — — 170,805 170,805

Dividends — — — ( 34,900 ) — ( 34,900 )

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Stock-based compensation — — 10,498 — — 10,498

Balance, January 1, 2023 126,300 $ 126,300 $ 2,753,055 $ 4,951,018 $ ( 447,497 ) $ 7,382,876

Balance, December 31, 2023 123,426 $ 123,426 $ 2,416,793 $ 5,609,212 $ ( 276,692 ) $ 7,872,739

The accompanying notes are an integral part of these consolidated financial statements.

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Stock-based compensation 41,410 51,518 29,675

Pension and other post-retirement (income) expense ( 23,104 ) ( 28,509 ) 14,904

Pension and other post-retirement expense (income) 23,089 ( 23,104 ) ( 28,509 )

Change in fair value of contingent consideration 4,168 ( 1,377 ) 3,119

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Amortization of deferred debt issuance costs and accretion of discounts 7,349 7,310 4,962

(Gain) loss on disposition of businesses and assets, net ( 2,887 ) ( 1,970 ) 886

Gain on disposition of businesses and assets, net — ( 2,887 ) ( 1,970 )

Amortization of acquired inventory revaluation — 45,289 35,201

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Debt extinguishment gain ( 3,685 ) ( 2,880 ) —

Unrealized foreign exchange loss 24,089 — —

Changes in assets and liabilities which provided (used) cash, excluding effects from companies acquired:

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Net cash provided by operating activities of continuing operations 279,387 672,500 1,330,184

Net cash provided by operating activities of discontinued operations 7,310 80,566 187,457

Net cash (used in) provided by operating activities of discontinued operations ( 188,115 ) 7,310 80,566

Net cash provided by operating activities 91,272 679,810 1,410,750

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Purchases of investments ( 6,300 ) ( 47,181 ) ( 23,130 )

Purchases of marketable securities ( 1,221,609 ) — —

Proceeds from maturities of marketable securities 550,000 — —

Proceeds from notes receivables — 8,890 —

Proceeds from disposition of businesses and assets 153 14,505 1,569

Proceeds from surrender of life insurance policies — 109 282

Cash paid for acquisitions, net of cash acquired ( 2,086 ) ( 7,518 ) ( 3,982,216 )

Net cash used in investing activities of continuing operations ( 761,210 ) ( 116,936 ) ( 4,089,797 )

Net cash used in investing activities of discontinued operations ( 15,915 ) ( 22,961 ) ( 13,872 )

Net cash provided by (used in) investing activities of discontinued operations 2,074,734 ( 15,915 ) ( 22,961 )

2023 January 1,

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(In thousands)

Net cash used in investing activities ( 132,851 ) ( 4,112,758 ) ( 504,498 )

Net cash provided by (used in) investing activities 1,313,524 ( 132,851 ) ( 4,112,758 )

Financing activities:

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Proceeds from borrowings — 240,000 1,900,282

Proceeds from term loan — 500,000 —

Payments of term loan ( 500,000 ) — —

Payments of senior unsecured notes ( 523,808 ) ( 57,876 ) ( 339,605 )

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Payments of debt financing and equity issuance costs ( 15 ) — ( 30,983 )

Payments on other credit facilities ( 1,292 ) ( 13,670 ) ( 4,494 )

Net proceeds (payments) on other credit facilities 6,323 ( 1,292 ) ( 13,670 )

Settlement of cash flow hedges — ( 762 ) ( 4,482 )

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Dividends paid ( 34,966 ) ( 35,344 ) ( 32,373 )

Net cash (used in) provided by financing activities ( 661,803 ) 2,941,657 ( 202,872 )

Net cash (used in) provided by financing activities of continuing operations ( 947,121 ) ( 661,803 ) 2,941,657

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 14,048 ) ( 33,747 ) ( 22,926 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 148,591 ) 216,723 210,720

Net increase (decrease) in cash, cash equivalents and restricted cash 443,627 ( 148,591 ) 216,723

Cash, cash equivalents and restricted cash at beginning of year 470,746 619,337 402,614

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Supplemental disclosures of non-cash investing and financing activities:

Consideration receivable from sale of Business $ 241,353 $ — $ —

Equity issued for business combination, net of issuance costs — — 2,638,144

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Nature of Operations:

PerkinElmer, Inc.

is a leading provider of products, services and solutions to the diagnostics and life sciences and applied markets.

Revvity, Inc.

(the “Company”) is a leading provider of health sciences solutions, technologies, expertise and services that deliver complete workflow from discovery to development, and diagnosis to cure.

The Company has two operating segments:

Discovery & Analytical Solutions and Diagnostics.

The Company’s Discovery & Analytical Solutions segment focuses on service and innovating for customers spanning the life sciences and applied markets.

The Company’s Diagnostics segment is targeted towards meeting the needs of clinically-oriented customers, especially within the growing areas of reproductive health, emerging market diagnostics and applied genomics.

The consolidated financial statements include the accounts of PerkinElmer, Inc.

and its subsidiaries (the “Company”).

Life Sciences and Diagnostics.

The Company’s Life Sciences segment focuses on service and innovating for custo mers spanning the life sciences market.

Th e Company’s Diagnostics segment is targeted towards meeting the needs of clinically-oriented customers, especially within the growing areas of reproductive health, emerging market diagnostics and applied genomics.

Effective as of April 26, 2023, the Company changed its name from “PerkinElmer, Inc.” to “Revvity, Inc.”.

Effective as of May 16, 2023, the Company changed the ticker symbol for its common stock to “RVTY” and the ticker symbol for its 1.875% Notes due 2026 to “RVTY 26”.

The consolidated financial statements include the accounts of the Company and its subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

In August 2022, the Company announced the proposed sale of certain assets and the equity interests of certain entities constituting the Company’s Analytical, Food and Enterprise Services businesses (the “Business”).

The 2021 and 2020 consolidated financial statements presented herein have been retrospectively adjusted to present the Business as discontinued operations for all periods presented.

In March 2023, the Company completed the previously announced sale of certain assets and the equity interests of certain entities constituting the Company’s Applied, Food and Enterprise Services businesses (the “Business”).

The Business is reported for all pe riods as discontinued operations in the Company’s consolidated financial statements.

The Company’s fiscal year ends on the Sunday nearest December 31.

The Company reports 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 1, 2023 (“fiscal year 2022”) and January 2, 2022 (“fiscal year 2021”) included 52 weeks.

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

The fiscal year ending December 31, 2023 (“fiscal year 2023”) will include 52 weeks.

The Company reports 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 December 31, 2023 (“fiscal year 2023”), January 1, 2023 (“fiscal year 2022”) and January 2, 2022 (“fiscal year 2021”) included 52 weeks.

The fiscal year ending December 29, 2024 (“fiscal year 2024”) will incl ude 52 weeks.

Accounting Policies and Estimates:

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The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions and other issues.

These reserves are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present related to the tax benefit.

Potential interest and penalties associated with such uncertain tax positions is recorded as a component of income tax expense.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

related to the tax benefit.

Potential interest and penalties associated with such uncertain tax positions is recorded as a component of income tax expense.

The Company is subject to the Global In tangible Low Taxed Income (“GILTI”) tax in the U.S.

The Company elected to treat taxes on future GILTI inclusions in U.S.

ta xable income as a current period expense when incurred.

The Company uses the portfolio approach for releasing income tax effects from accumulated other comprehensive income.

Property, Plant and Equipment:

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defined benefit pension plans and other postretirement benefits.

The Company immediately recognizes actuarial gains and losses in operating results in the year in which the gains and losses occur.

The Company recognizes actuarial gains and losses in operating results in the year in which the gains and losses occur.

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

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The Company’s intangible assets consist of (i) goodwill, which is not being amortized;

(ii) indefinite lived intangibles, which consist of a trade name that is not subject to amortization;

and (iii) amortizing intangibles, which consist of patents, trade names and trademarks, licenses, customer relationships and purchased technologies, which are being amortized over their estimated useful lives.

and (ii) amortizing intangibles, which consist of patents, trade names and trademarks, licenses, customer relationships and purchased technologies, which are being amortized over their estimated useful lives.

The process of testing goodwill for impairment involves the determination of the fair value of the applicable reporting units.

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This annual impairment assessment is performed by the Company on the later of January 1 or the first day of each fiscal year.

Indefinite-lived intangibles are also subject to an annual impairment test.

The impairment test consists of a comparison of the fair value of the indefinite-lived intangible asset with its carrying amount.

If the carrying amount of an indefinite-lived 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 .

Amortizing intangible assets are reviewed for impairment when indicators of impairment are present.

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Stock-Based Compensation:

The Company accounts for stock-based compensation expense based on estimated grant date fair value, generally using the Black-Scholes option-pricing model.

The Company accounts for stock-based compensation expense based on estimated grant date fair value, generally using the Black-Scholes option-pricing model or the quoted price of the Company’s stock on the grant

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair value is recognized as expense in the consolidated financial statements over the requisite service period.

The determination of fair value and the timing of expense using option pricing models such as the Black-Scholes model require the input of subjective assumptions, including the expected term and the expected price volatility of the underlying stock.

The Company estimates the expected term assumption based on historical

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company estimates the expected term assumption based on historical experience.

In determining the Company’s expected stock price volatility assumption, the Company reviews both the historical and implied volatility of the Company’s common stock.

1 unchanged sentence

Investments in debt securities that are classified as available for sale are recorded at fair value with unrealized gains and losses included in AOCI until realized.

Investments in equity securities are recorded at their fair values with unrealized holding gains and losses included in earnings.

Investments in equity securities without a readily determinable fair value are carried at cost minus impairment, if any.

Investments in debt securities that are classified as held-to-maturity are recorded at amortized cost.

Investments in equity securities are recorded at fair values with unrealized holding gains and losses included in earnings.

Investments in equity securities without a readily determinable fair values are carried at cost minus impairment, if any.

When an observable price change in orderly transactions for the identical or a similar investment of the same issuer has occurred, the Company elects to carry those equity investments at fair value as of the date that the observable transaction occurred.

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Research and development costs are expensed as incurred.

In-process research and development (“IPRD”) costs acquired in a business combination are recorded at fair value as an intangible asset at the acquisition date and amortized once the product is ready for sale or expensed if abandoned.

Restructuring and Other Costs:

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Costs related to employee separation arrangements requiring future service beyond a specified minimum retention period are recognized over the service period .

The Company recorded restructuring charges, included in selling, general and administrative expenses in the consolidated statements of operations, of $ 26.6 million , $ 13.6 million and $ 14.4 million primarily associated with workforce reductions during fiscal years 2023, 2022 and 2021, respectively .

The Company expects severance payments will be substantially completed duri ng fiscal year 2024 .

Comprehensive Income:

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Discontinued or dedesignated cash flow hedges are immediately settled with counterparties, and the related accumulated derivative gains or losses are recognized into net earnings on the consolidated financial statements.

Settled cash flow hedges related to forecasted transactions that remain probable are recorded as a component of other comprehensive (loss) income and are subsequently amortized into net earnings when the hedged exposure affects net earnings.

Settled cash flow hedges related to forecasted transactions that remain probable are recorded as a component of other comprehensive income (loss) and are subsequently amortized into net earnings when the hedged exposure affects net earnings.

Forward contract effectiveness for cash flow hedges is calculated by comparing the fair value of the contract to the change in value of the anticipated transaction using forward rates on a monthly basis.

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The cumulative translation gains or losses will remain in AOCI until the foreign subsidiaries are liquidated or sold.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in the Company's consolidated balance sheet.

1 unchanged sentence

Operating lease ROU assets and liabilities were recognized based on the present value of the remaining lease payments over the lease term.

When the Company’s lease did not provide an implicit rate, the Company used its incremental

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

borrowing rate in determining the present value of lease payments.

When the Company’s lease did not provide an implicit rate, the Company used its incremental borrowing rate in determining the present value of lease payments.

The Company used the implicit rate when readily determinable.

1 unchanged sentence

The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Lease expense is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.

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Unless otherwise discussed, such pronouncements did not have or will not have a significant impact on the Company’s consolidated financial position, results of operations and cash flows or do not apply to the Company’s operations.

In October 2021, t he FASB issued Accounting Standards Update 2021-08, Accounting for Contract Assets and Contract Liabilities From Contracts With Customers ( “ASU 2021-08” ).

ASU 2021-08 amends Accounting Standards Codification 805, Business Combinations ( “ASC 805” ) , to require acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination.

Under ASC 805, an acquirer generally recognizes such items at fair value on the acquisition date.

The Company adopted the guidance beginning on January 2, 2023 and will apply the guidance on business combinations beginning in fiscal year 2023.

In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

ASU 2023-09 will require public entities to disclose on an annual basis a tabular reconciliation using both percentages and amounts, broken out into specific categories with certain reconciling items at or above 5% of the statutory (i.e.

expected) tax further broken out by nature and/or jurisdiction.

ASU 2023-09 requires all entities to disclose on an annual basis the amount of income taxes paid (net of refunds received), disaggregated between federal (national), state/local and foreign, and amounts paid to an individual jurisdiction when 5% or more of the total income taxes paid.

The guidance is required to be applied on a prospective basis;

retrospective application is permitted.

The guidance is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

Although the guidance only requires additional disclosures, the Company is in the process of determining the impact of this guidance to its income tax disclosures.

In November 2023, t he FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

ASU 2023-07 amends Accounting Standards Codification 280, Segment Reporting (“ASC 280”) to require public entities to disclose significant segment expenses and other segment items that are regularly provided to the chief operating decision maker (“CODM”) and included in each reported measure of a reportable segment’s profit or loss, on an annual and interim basis, and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

ASU 2023-07 permits entities to report multiple measures of a reportable segment’s profit or loss if the CODM uses those measures to allocate resources and assess performance.

The guidance is required to be applied retrospectively to all periods presented in the financial statements, unless impracticable.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is also permitted.

Although the guidance only requires additional disclosures, the Company is in the process of determining the impact of this guidance to its segment disclosures.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For arrangements with multiple performance obligations, the Company accounts for individual products and services separately if they are distinct - i.e., if a product or service is separately identifiable from other items in the bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

The consideration (including any discounts) is allocated between separate products and services in a bundle based on their stand-alone selling prices.

The consideration (including any discounts) is allocated to each performance obligation in an arrangement based on relative stand-alone selling prices.

The stand-alone selling prices are determined based on the prices at which the Company separately sells the products, extended warranties, and services.

For items that are not sold separately, the Company estimates stand-alone selling prices by reference to the amount charged for similar items on a stand-alone basis.

The Company sells products and services predominantly through its direct sales force.

As a result, the use of distributors is generally limited to geographic regions where the Company has no direct sales force.

The Company does not offer product return or exchange rights (other than those relating to defective goods under warranty) or price protection allowances to its customers, including distributors.

Payment terms granted to distributors are the same as those granted to end-customers and payments are not dependent upon the distributor's receipt of payment from their end-user customers.

The Company sells products and services predominantly through its direct sales force, and the use of distributors is generally limited to geographic regions where the Company has no direct sales force.

The Company does not offer product return or exchange rights (other than those relating to defective goods under warranty).

In instances where the timing of revenue recognition differs from the timing of invoicing, the Company determined that the contracts generally do not include a significant financing component.

The primary purpose of its invoicing terms is to provide customers with simplified and predictable ways of purchasing products and services, rather than to receive financing from the customers or to provide customers with financing.

Examples include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period, and multi-year software licenses or software subscriptions that are invoiced annually with revenue recognized upfront.

In limited circumstances where the Company provides the customer with a

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

significant benefit of financing, the Company uses the practical expedient and only adjusts the transaction price for the effects of the time value of money and only on contracts where the duration of financing is more than one year.

In limited circumstances where the Company provides the customer with a significant benefit of financing, the Company uses the practical expedient and only adjusts the transaction price for the effects of the time value of money and only on contracts where the duration of financing is more than one year.

Nature of goods and services

The Discovery & Analytical Solutions segment of the Company principally generates revenue from sales of instruments, reagents, informatics, software, subscriptions, detection and imaging technologies, extended warranties, training and services in the life sciences market and instruments, consumables and services in the applied markets.

The Diagnostics segment of the Company principally generates revenue from sales of instruments, solutions, consumables, reagents, extended warranties and services in the diagnostics market.

Products and services may be sold separately or in bundled packages.

The Life Sciences segment principally generates revenue from sales of instruments, reagents, software, subscriptions, detection and imaging technologies, extended warranties, training and services in the life sciences market.

The Diagnostics segment principally generates revenue from sales of instruments, solutions, consumables, reagents, and services in the diagnostics market.

The typical length of a contract for service is 12 to 36 months.

The revenue generated from the sale of instruments, consumables, reagents, and certain software is recognized at a point in time.

The revenue generated from the sale of instruments (inclusive of consumables), reagents, and certain software is recognized at a point in time.

The Company recognizes revenue in these arrangements at the point in time when control of the products has been transferred to customers, which is typically at delivery.

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The Company does not charge a fee for the use of the instrument and retains ownership of the placed instrument.

The Company has a right to remove the instrument and replace it with another instrument at the customer’s site at any time throughout the contract term.

The Company recognizes revenue upon delivery of reagents, which is the point in time where the Company has performed its obligation to provide a screening solution to the customer.

Payment terms and conditions vary, although terms generally include a requirement of payment within 30 to 60 days.

The revenue generated from the sale of licenses for software as a service, cloud services, subscriptions, extended warranties, and laboratory services and training is recognized over time.

Term licenses, subscriptions and cloud services, are generally recognized ratably over the contract period or based upon consumption.

The revenue generated from the sale of licenses for software as a service, cloud services, subscriptions, and laboratory services and training is recognized over time.

Term licenses, subscriptions and cloud services, are generally recognized ratably over the contract period.

The Company sells its software subscriptions and cloud services with maintenance services and, in some cases, with consulting services.

The Company recognizes revenue for the software commencing when the service is made available to the customer.

For maintenance and consulting services, revenue is recognized ratably over the period in which the services are provided.

For maintenance and consulting services, revenue is recognized over the period in which the services are provided.

Revenue for laboratory services is recognized over the contract period or when the service is billable, based on time and materials.

Payment terms and conditions vary, although terms generally include a requirement of payment within 30 to 60 days.

Product revenue is recognized at a point in time and all service revenue is recognized over time.

Product revenue is recognized at a point in time and service revenue is generally recognized over time.

Disaggregation of revenue

In the following tables, revenue is disaggregated by primary geographical market, end-markets and timing of revenue recognition.

In the following tables, revenue is disaggregated by primary geographical market and major good and service lines.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Reportable Segments

For the fiscal year ended

January 1, 2023 January 2, 2022 January 3, 2021

Discovery & Analytical Solutions Diagnostics Total Discovery & Analytical Solutions Diagnostics Total Discovery & Analytical Solutions Diagnostics Total

December 31, 2023 January 1, 2023 January 2, 2022

Sciences Diagnostics Total Life Sciences Diagnostics Total Life Sciences Diagnostics Total

(In thousands)

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$ 1,292,340 $ 1,458,231 $ 2,750,571 $ 1,292,909 $ 2,018,913 $ 3,311,822 $ 895,869 $ 2,931,939 $ 3,827,808

Primary end-markets

Diagnostics $ — $ 2,018,913 $ 2,018,913 $ — $ 2,931,939 $ 2,931,939 $ — $ 2,066,942 $ 2,066,942

Life sciences 1,292,909 — 1,292,909 895,869 — 895,869 596,288 — 596,288

Major goods/service lines

Life Sciences reagents $ 732,789 $ — $ 732,789 $ 691,344 $ — $ 691,344 $ 399,518 $ — $ 399,518

Life Sciences instruments 381,262 — 381,262 405,554 — 405,554 329,584 — 329,584

Life Sciences software 178,289 — 178,289 196,011 — 196,011 166,767 — 166,767

Reproductive health — 501,302 501,302 — 516,574 516,574 — 514,863 514,863

Applied genomics — 228,443 228,443 — 393,602 393,602 — 619,357 619,357

Immunodiagnostics — 728,486 728,486 — 1,108,737 1,108,737 — 1,797,719 1,797,719

$ 1,292,340 $ 1,458,231 $ 2,750,571 $ 1,292,909 $ 2,018,913 $ 3,311,822 $ 895,869 $ 2,931,939 $ 3,827,808

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Major Customer Concentration

Revenues from one customer in the Company’s Diagnostics segment represent approximately $ 330.7 million, $ 638.6 million and $ 97.8 million of the Company’s total revenue during the fiscal years 2022, 2021 and 2020, respectively.

No single customer comprises more than 10% of net revenues during the fiscal year 2023.

Revenues from one customer in the Company’s Diagnostics segment represent approximately $ 330.7 million and $ 638.6 million of the Company’s total revenue during the fiscal years 2022 and 2021, respectively.

Contract Balances

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The contract liability balances at the beginning of each period presented were generally fully recognized in the subsequent three month period.

The performance obligations that are unsatisfied (or partially unsatisfied) at the end of the period are not material to the Company.

Contract balances were as follows:

January 1, 2023 January 2, 2022

December 31, 2023 January 1, 2023

(In thousands)

1 unchanged sentence

Contract liabilities ( 22,504 ) ( 30,133 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Business Combinations

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BioLegend is recognized as a leading, global provider of life science antibodies and reagents headquartered in San Diego, California, with approximately 700 employees.

The operations for this acquisition is reported within the results of the Company ’ s Discovery & Analytical Solutions segment from the acquisition date.

The operations for this acquisition is reported within the results of the Company ’ s Life Sciences segment from the acquisition date.

The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired, and is not tax deductible.

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The following unaudited pro forma information presents the combined financial results for the Company and BioLegend as if the acquisition of BioLegend had been completed at the beginning of fiscal year 2020:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2022 January 3,

(In thousands, except per share data)

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The fiscal year 2021 unaudited pro forma income from continuing operations was adjusted to exclude approximately $ 43.2 million of acquisition-related transaction costs and $ 23.3 million of costs of bridge financing and debt pre-issuance hedges that were recognized in expense during fiscal year 2021.

The fiscal year 2020 unaudited pro forma income from continuing operations was adjusted to include these acquisition-related transaction costs and the nonrecurring expenses related to the bridge financing and debt pre-issuance hedging costs and fair value adjustments as if those expenses were incurred in fiscal year 2020.

These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments, such as fair value adjustment to inventory, increased interest expense on debt obtained to finance the transaction, and increased amortization for the fair value of acquired intangible assets.

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The acquired businesses include Oxford Immunotec Global PLC, a company based in Abingdon, UK with approximately 275 employees, for total consideration of $ 590.9 million and Nexcelom Bioscience Holdings, LLC, a company based in Lawrence, Massachusetts with approximately 130 employees, for total consideration of $ 267.3 million, and five other businesses, which were acquired for total consideration of $ 318.6 million.

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

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 12.4 years .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

The total purchase price for the acquisitions in fiscal year 2021 has been allocated to the estimated fair value of assets acquired and liabilities assumed as follows:

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Total $ 5,688,964 $ 981,698

The Company does not consider the other acquisitions completed during fiscal year 2021 to be material to its consolidated results of operations;

The Company does not consider the acquisitions completed during fiscal years 2022 and 2021, with the exception of the BioLegend acquisition, to be material to its consolidated results of operations;

therefore, the Company is only presenting pro forma financial information of operations for the BioLegend acquisition.

The aggregate revenue and results of operations for the other acquisitions completed during fiscal year 2021 for the period from their respective acquisition dates to January 2, 2022 were not material.

Acquisitions in fiscal year 2020

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

The acquired businesses were Horizon Discovery Group plc, 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.

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

Identifiable definite-lived intangible assets, such as core technology, trade names, customer relationships and in-process research and development, acquired as part of these acquisitions had a weighted average amortization period of 11 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The total purchase price for the acquisitions in fiscal year 2020 has been allocated to the estimated fair value of assets acquired and liabilities assumed as follows:

(In thousands)

Fair value of business combinations:

Cash payments $ 437,661

Other liability 1,660

Working capital and other adjustments ( 384 )

cash acquired ( 26,840 )

Total $ 412,097

Identifiable assets acquired and liabilities assumed:

Current assets $ 35,532

Property, plant and equipment 20,302

Other assets 18,114

Identifiable intangible assets:

Core technology 65,730

Trade names 5,580

Customer relationships and backlog 108,523

Goodwill 221,751

Deferred taxes ( 25,674 )

Deferred revenue ( 2,031 )

Liabilities assumed ( 46,430 )

Total $ 412,097

The Company does not consider the acquisitions completed during fiscal year 2020 to be material to its consolidated results of operations.

The aggregate revenue and results of operations for the acquisitions completed during fiscal year 2020 for the period from their respective acquisition dates to January 3, 2021 were not material.

As of January 1, 2023, the allocations of purchase prices for all acquisitions completed in fiscal years 2021 and 2020 were considered final.

During fiscal year 2022, the Company obtained information relevant to determining the fair values of certain tangible and intangible assets acquired, and liabilities assumed, related to recent acquisitions and adjusted its purchase price allocations.

The adjustments to the preliminary measurements were not material.

The aggregate revenue and results of operations for acquisitions completed during fiscal years 2022 and 2021 for the fiscal year period from their respective acquisition dates were not material.

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.

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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 1, 2023, the Company may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $ 106.2 million.

As of January 1, 2023, the Company has recorded contingent consideration obligations of $ 46.6 million, of which $ 3.6 million was recorded in accrued expenses and other current liabilities, and $ 43.0 million was recorded in long-term liabilities.

As of January 2, 2022, the Company had recorded contingent consideration obligations with an estimated fair value 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 is 5.9 years from January 1, 2023, and the remaining weighted average expected

Increases or decreases in the fair value of contingent consideration

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

earnout period at January 1, 2023 was 4.9 years.

liabilities primarily result from changes in the estimated probabilities of achieving revenue thresholds or product development milestones during the earnout period.

As of December 31, 2023, the Company may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $ 98.0 million.

As of December 31, 2023, the Company has recorded contingent consideration obligations of $ 40.0 million, of which $ 11.0 million was recorded in accrued expenses and other current liabilities, and $ 29.0 million was recorded in long-term liabilities.

The expected maximum earnout period for acquisitions with open contingency periods is 7.9 years from December 31, 2023, and the remaining weighted average expected earnout period at December 31, 2023 was 5.0 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.

Total acquisition and dive stiture-related costs were $ 39.8 million, $ 80.8 million and $ 4.9 million for fiscal years 2022, 2021 and 2020.

These amounts included $ 26.5 million and $ 6.9 million of stock compensation expense related to awards given to BioLegend employees in fiscal years 2022 and 2021, respectively, $ 5.4 million of net foreign exchange gain and $ 23.4 million of costs of bridge financing and debt pre-issuance hedges related to the BioLegend acquisition in fiscal year 2021, and $ 0.5 million of acquisition-related interest expenses in fiscal year 2020.

These acquisition and divestiture-related costs were expensed as incurred and recorded in selling, general and administrative expenses and interest and other expense, net in the Company’s consolidated statements of operations.

Total acquisition and dive stiture-related costs, included in selling, general and administrative expense in the Company’s consolidated statements of operations, were $ 69.2 million, $ 39.8 million and $ 62.8 million for fiscal years 2023, 2022 and 2021.

These amounts included $ 34.3 million of rebranding expenses in fiscal year 2023 and $ 20.0 million, $ 26.5 million and $ 6.9 million of stock compensation expense related to awards given to BioLegend employees in fiscal years 2023, 2022 and 2021 , respectively.

Total acquisition and dive stiture-related costs, included in interest and other expense, net in the Company’s consolidated statements of operations, were $ 19.9 million and $ 18.0 million for fiscal years 2023 and 2021.

These amounts included $ 24.1 million of net foreign exchange loss and $ 4.2 million interest income related to the sale of the Business in fiscal year 2023, and $ 5.4 million of net foreign exchange gain and $ 23.4 million of costs of bridge financing and debt pre-issuance hedges related to the BioLegend acquisition in fiscal year 2021.

These acquisition and divestiture-related costs were expensed as incurred.

Discontinued Operations

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

In August 2022, the Company entered into a Master Purchase and Sale Agreement (the “Purchase Agreement”) with Polaris Purchaser, L.P.

(the “Purchaser”), a Delaware limited partnership owned by funds managed by affiliates of New Mountain Capital L.L.C.

(the “Sponsor”), under which the Company agreed to sell to the Purchaser certain assets and the equity interests of certain entities constituting the Company’s Analytical, Food and Enterprise Services businesses (the “Business”) (as further defined in the Purchase Agreement), for cash consideration of up to approximately $ 2.45 billion and the Purchaser’s assumption of certain liabilities relating to the Business (collectively, the “Transaction”).

Approximately $ 2.30 billion of the purchase price will be payable at closing, subject to certain customary adjustments, which includes $ 75.0 million in deferred payments tied to the transfer of the PerkinElmer brand and related trademarks to the Purchaser (which may be completed within 24 months following the date of the closing at the Company’s election).

The Purchase Agreement also provides for potential post-closing payments totaling up to $ 150.0 million, which are contingent on the exit valuation the Sponsor and its affiliated funds receive on a sale or other capital events related to the Business.

The Transaction is expected to close in the first quarter of fiscal year 2023, subject to regulatory approvals and other customary closing conditions.

The Business had been recorded in the Discovery & Analytical Solutions segment.

On March 13, 2023, the Company completed the previously announced sale of the Business (the “Closing”) to PerkinElmer Topco, L.P.

(formerly known as Polaris Purchaser, L.P.) (the “Purchaser”), a Delaware limited partnership owned by funds managed by affiliates of New Mountain Capital L.L.C.

(the “Sponsor”), for an aggregate purchase price of up to $ 2.45 billion .

The Company received approximately $ 2.13 billion in cash proceeds, before transaction costs and subject to post-closing adjustments.

The Company is entitled to an additional $ 75.0 million in proceeds as consideration for the Company ’s ceasing the use of the PerkinElmer brand and related trademarks and transferring them to the Purchaser.

This consideration is expected to be received in installments through the first half of 2025.

The discounted value of the $ 75.0 million was measured as $ 65.2 million and was included in the proceeds.

In addition, the Company is entitled to additional consideration of up to $ 150.0 million that is contingent on the exit valuation the Sponsor and its affiliated funds receive on a sale or other capital events related to the Business.

The fair value of this element of consideration was determined to be $ 15.9 million and was included in the proceeds at Closing.

The Company also recorded a receivable, included in Other current assets in the consolidated balance sheets, of approximately $ 160.2 million as of December 31, 2023 for post-closing adjustments that is expected to be received during fiscal year 2024.

The final amount of the receivable related to the post-closing adjustments is subject to change.

The Company has measured the gain on sale and related income tax provision, however, additional adjustments may arise that may impact the final measurement of the gain.

The elements of the gain calculation that may result in adjustments include

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the measurement of the proceeds, including the settlement of the post-closing adjustments, as well as the related tax effects of such adjustments and the filing of tax returns for the period that includes the sale.

In connection and concurrent with the Closing, the Company has also entered into a Transition Services Agreement ( “TSA”) with the Purchaser for a period of up to 24 months from the Closing and a Contract Manufacturing Agreement ( “CMA”) for two locations which expired in June 2023.

The costs and amounts of reimbursements related to the CMA were not significant.

The costs and amounts of reimbursements related to the TSA and other commercial transactions between the parties were not significant in fiscal year 2023 and the amounts in future periods are not expected to be significant.

The Business had been reported in the Company’s Discovery & Analytical Solutions segment, which is now referred to as the Life Sciences segment.

The sale of the Business represents a strategic shift that will have a major effect on the Company's operations and financial statements.

Accordingly, the Company has classified the assets and liabilities related to the Business as assets and liabilities of discontinued operations in the Company’s consolidated balance sheets and its results of operations are classified as income from discontinued operations in the Company’s consolidated statements of operations.

Financial information in this report relating to fiscal years 2021 and 2020 has been retrospectively adjusted to reflect this discontinued operation.

The summary pre-tax operating results of the discontinued operations, were as follows:

January 1, 2023 January 2, 2022 January 3, 2021

Accordingly, t he Business is reported for all pe riods as discontinued operations in the Company’s consolidated financial statements.

The following table summarizes the results of discontinued operations which are presented as income from discontinued operations in the Company’s consolidated statements of operations:

December 31, 2023 January 1, 2023 January 2, 2022

(In thousands)

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Research and development expenses 10,434 64,605 74,632

Operating income 68,409 73,921 111,308

Other (income) expense, net ( 5,195 ) ( 2,383 ) 5,016

Operating (loss) income ( 37,942 ) 68,409 73,921

Other income:

Gain on sale 811,472 — —

Other (expense) income, net ( 49 ) 5,195 2,383

Total other income 811,423 5,195 2,383

Income from discontinued operations before income taxes 773,481 73,604 76,304

The carrying amounts of the major classes of assets and liabilities included in discontinued operations related to the Business consisted of the following:

Provision for income tax 259,890 17,101 22,583

Income from discontinued operations $ 513,591 $ 56,503 $ 53,721

The table below provides a reconciliation of the carrying amounts of the major classes of assets and liabilities of the discontinued operations to the amounts presented separately in the consolidated balance sheet at January 1, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

January 1, 2023 January 2, 2022

January 1, 2023

(In thousands)

11 unchanged sentences

Total assets of discontinued operations

$ 1,693,704 $ 1,699,542

Accounts payable 29,912

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Total liabilities of discontinued operations $ 272,865

The following operating and investing non-cash items from discontinued operations were as follows for the fiscal years ended:

The following operating and investing items from discontinued operations were as follows for the fiscal years ended:

2023 January 1,

12 unchanged sentences

Change in fair value of financial securities 33,921 15,754 ( 10,985 )

Other components of net periodic pension (credit) cost ( 33,158 ) ( 37,385 ) 13,819

Other expense, net 7,900 3,358 4,715

Other components of net periodic pension cost (credit) 19,006 ( 33,158 ) ( 37,385 )

Foreign exchange losses and other expense, net 37,977 7,900 3,358

Total interest and other expense, net $ 117,586 $ 90,862 $ 54,875

11 unchanged sentences

(In thousands)

Fiscal year ended January 1, 2023

Fiscal year ended December 31, 2023

Federal $ 39,800 $ ( 60,845 ) $ ( 21,045 )

29 unchanged sentences

State income taxes, net ( 265 ) 7,820 36,832

Impact of rate changes ( 12,795 ) — 14,031

Prior year tax matters 3,971 ( 10,160 ) 1,850

1 unchanged sentence

General business tax credits ( 4,718 ) ( 7,132 ) ( 2,715 )

Transfer pricing matters ( 6,725 ) — —

Change in valuation allowance 6,772 4,964 ( 179 )

Rate change on long term intangibles — 14,031 —

Effect of foreign repatriations ( 4,737 ) ( 4,940 ) 37,147

Foreign consolidations — — 15,222

Other, net 4,472 ( 6,003 ) 2,498

Total $ 3,473 $ 139,161 $ 314,146

The variation in the Company’s 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 related to foreign earnings that the Company no longer considered indefinitely reinvested.

During fiscal year 2022, the Company adjusted these estimates and recognized a net benefit of $ 4.9 million relative to its position to permanently reinvest those foreign earnings.

The Company also recognized $ 1.1 million of benefit in fiscal year 2022 derived from the tax holiday in Singapore.

The Company recognized $ 18.2 million in fiscal year 2021 and $ 12.7 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 2022 was $ 0.01 and $ 0.01 , respectively, for fiscal year 2021 was $ 0.16 and $ 0.16 , respectively, and for fiscal year 2020 was $ 0.11 and $ 0.11 , respectively.

The tax holiday in China is renewed every three years.

The Company expects to renew the tax holiday for one of the Company’s subsidiaries in China that is set to expire in fiscal year 2023.

The Company regularly reviews its tax positions in each significant taxing jurisdiction in the process of evaluating its unrecognized tax benefits.

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The Company classifies interest and penalties as a component of income tax expense.

At January 1, 2023 and January 2, 2022, the Company had accrued interest and penalties of $ 7.2 million and $ 7.6 million, respectively.

During fiscal years 2022, 2021 and 2020, the Company recognized a net (benefit) expense of $( 0.5 ) million, $ 1.8 million and $ 1.8 million, respectively,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

for interest and penalties in its total tax provision.

At January 1, 2023, substantially all of the unrecognized tax benefits, if recognized, would affect the effective tax rate.

The Company believes that it is reasonably possible that approximately $ 17.8 million of its uncertain tax positions at January 1, 2023, including accrued interest and penalties, and net of tax benefits, may be resolved over the next twelve months as a result of lapses in applicable statutes of limitations and potential settlements.

At December 31, 2023 and January 1, 2023, the Company had accrued interest and penalties of $ 6.3 million and $ 7.2 million, respectively.

During fiscal years 2023, 2022 and 2021, the Company recognized a net (benefit) expense of $( 1.1 ) million, $( 0.5 ) million and $ 1.8 million, respectively, for interest and penalties in its total tax provision.

At December 31, 2023, substantially all of the unrecognized tax benefits, if recognized, would affect the effective tax rate.

The Company believes that it is reasonably possible that approximately $ 71.6 million of its uncertain tax positions at December 31, 2023, including accrued interest and penalties, and net of tax benefits, may be resolved over the next twelve months as a result of lapses in applicable statutes of limitations and potential settlements.

Various tax years after 2010 remain open to examination by certain jurisdictions in which the Company has 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The tax effects of temporary differences and attributes that gave rise to deferred income tax assets and liabilities were as follows:

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Total $ ( 568,502 ) $ ( 709,161 )

At January 1, 2023, for income tax return purposes, the Company had U.S.

federal net operating loss carryforwards of $ 67.5 million, state net operating loss carryforwards of $ 4.9 million, foreign net operating loss carryforwards of $ 458.0 million, state tax credit carryforwards of $ 13.8 million and general business tax credit carryforwards of $ 0.1 million.

At December 31, 2023, the Company had U.S.

federal net operating loss carryforwards of $ 109.8 million, state net operating loss ca rryforwards of $ 8.9 million, foreign net operating loss carryforwards of $ 439.8 million, state tax credit carryforwards of $ 13.8 million and general business tax credit carryforwards of $ 0.1 million.

Certain net operating loss carryforwards and state credit carryforwards do not expire, while other losses begin to expire in 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Valuation allowances take into consideration limitations imposed upon the use of the tax attributes and reduce the value of such items to the likely net realizable amount.

1 unchanged sentence

Valuation allowances have been provided on state net operating loss and state tax credit carryforwards and on certain foreign tax attributes that the Company has determined are not more likely tha n not to be realized.

The increase in the valuation allowance of $ 7.2 million in fiscal year 2022 is primarily due to net operating losses incurred for which the benefit is not expected to be realized.

As of January 1, 2023, the Company evaluated its undistributed foreign earnings and identified approximately $ 879.0 million in earnings that it does not consider to be permanently reinvested.

The Company has recorded a provision of approximately $ 15.8 million for the taxes that would fall due when such earnings are repatriated.

The Company began repatriating such foreign earnings to the United States in the first quarter of fiscal year 2022 and expects to continue the repatriation in fiscal year 2023.

There are other undistributed foreign earnings and outside basis differences for which the Company has not provided for any taxes as these amounts continue to be indefinitely reinvested, and it is not practicable to estimate the amount of deferred tax liability that would be incurred.

The Company is no longer permanently reinvested in the undistributed earnings of its international subsidiaries that have been previously taxed at the U.S.

federal level and/or would be subject to a dividend received deduction if repatriated.

The Company recorded the applicable taxes that will be due when such earnings are repatriated.

For the remaining other undistributed foreign earnings and outside basis differences, the Company continues to be indefinitely reinvested and have not

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

provided any taxes for these amounts, and it is not practicable to estimate the amount of deferred tax liability that would be incurred.

Earnings Per Share

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Antidilutive securities include outstanding stock options with exercise prices and average unrecognized compensation cost in excess of the average fair market value of common stock for the related period.

Antidilutive options were excluded from the calculation of diluted net income per share and could become dilutive in the future.

Antidilutive securities also include restricted stock awards with average unrecognized compensation cost in excess of the average fair market value of the common stock for the related period.

Antidilutive options and restricted stock awards were excluded from the calculation of diluted net income per share and could become dilutive in the future.

Accounts Receivable, Net

5 unchanged sentences

Total accounts receivable, net $ 662,404 $ 646,820

Reserves for credit losses consisted of the following:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Provisions Charges/

offs Other (1)

Reserves for credit losses consisted of the following:

Balance at Beginning of Year Provisions Charges/

Write-offs Other (1)

Balance at End

(In thousands)

1 unchanged sentence

Year ended January 1, 2023 38,254 9,857 ( 9,672 ) ( 896 ) 37,543

Year ended December 31, 2023 37,543 9,067 ( 3,559 ) 329 43,380

(1) Other amounts primarily relate to the impact of acquisitions, discontinued operations and foreign exchange movements.

Inventories consisted of the following:

Inventories, Net

Inventories, net consisted of the following:

2023 January 1,

3 unchanged sentences

Finished goods 161,618 146,616

Total inventories $ 405,462 $ 425,890

Total inventories, net $ 428,062 $ 405,462

Property, Plant and Equipment, Net

8 unchanged sentences

Total property, plant and equipment, net $ 509,654 $ 482,950

Depreciation expense on property, plant and equipment for the fiscal years ended January 1, 2023, January 2, 2022 and January 3, 2021 was $ 56.4 million, $ 54.9 million and $ 40.7 million, respectively.

Depreciation expense on property, plant and equipment for the fiscal years ended December 31, 2023, January 1, 2023 and January 2, 2022 was $ 66.7 million, $ 56.4 million and $ 54.9 million, respectively.

Marketable Securities and Investments

Investments, which are classified in Other assets, net, consisted of the following:

Investments consisted of the following:

2023 January 1,

(In thousands)

Marketable securities $ 11,083 $ 33,683

Marketable securities - held to maturity (current) $ 689,916 $ —

Marketable securities - available for sale 13,913 11,083

Equity investments 57,206 54,503

Investments in debt securities 42,500 13,500

Notes receivables and other investments 12,280 42,500

$ 773,315 $ 108,086

Marketable securities.

Marketable securities include equity and fixed-income securities.

The net unrealized holding gain and loss on marketable securities, net of deferred income taxes, reported as a component of other comprehensive income (loss) in the consolidated statements of stockholders’ equity, was not material in fiscal years 2022 and 2021.

Marketable securities - held to maturity.

The Company’s investments in U.S.

treasury securities are classified as held-to-maturity and measured at amortized cost.

All the outstanding investments in U.S.

treasury securities had a contractual maturity of less than one year as of December 31, 2023 and have been classified as current in the consolidated balance sheet to match the maturities of the long-term debt expected to be retired concurrently with the maturity of the marketable securities.

Marketable securities - available for sale.

Marketable securities, which are included in Other assets, net, are accounted for as available for sale and include equity and fixed-income securities.

The proceeds from the sales of securities and the related gains and losses are not material for any period presented.

Marketable securities classified as available for sale consisted of the following:

Market Value Gross Unrealized Holding

Cost Gains (Losses)

(In thousands)

January 1, 2023

Equity securities $ 6,775 $ 6,775 $ — $ —

Other 4,308 4,308 — —

$ 11,083 $ 11,083 $ — $ —

January 2, 2022

Equity securities $ 29,768 $ 29,768 $ — $ —

Fixed-income securities 7 7 — —

Other 3,908 3,971 — ( 63 )

$ 33,683 $ 33,746 $ — $ ( 63 )

Equity Investments.

The Company has equity interests in privately-held entities over which the Company neither has significant influence nor control.

Equity investments as of January 1, 2023 and January 2, 2022 consisted of the following:

Equity investments, which are included in Other assets, net, as of December 31, 2023 and January 1, 2023 consisted of the following:

2023 January 1,

3 unchanged sentences

$ 57,206 $ 54,503

The amount of upward adjustments during fiscal years 2022 and 2021 were $ 2.9 million and $ 19.6 million, respectively.

The cumulative amount of upward adjustments as of January 1, 2023 and January 2, 2022 was $ 30.7 million and $ 27.8 million, respectively.

The amount of impairments and downward adjustments during fiscal year 2020 was $ 4.9 million.

The cumulative amount of impairments and downward adjustments as of each of January 1, 2023 and January 2, 2022 was $ 5.0 million.

Investments in debt securities.

The Company has investments in debt securities that are classified as available for sale.

The amortized cost of these investments are not materially different to their fair value.

Investments with total carrying value of $ 25.5 million have contractual maturities of one year through five years.

Investments with a carrying value of $ 17.0 million are convertible into equity securities or are due and payable upon event of default (as defined in the applicable agreement).

The amount of upward adjustments during the periods presented were not material.

The cumulative amount of upward adjustments as of December 31, 2023 and January 1, 2023 was $ 31.3 million and $ 30.7 million, respectively.

The cumulative amount of impairments and downward adjustments as of each of December 31, 2023 and January 1, 2023 was $ 5.0 million.

Notes receivables and other investments.

Notes receivables and other investments, which are included in Other assets, net, are carried at cost less allowance for credit losses.

The amortized cost of these investments are not materially different than the fair value.

Notes receivables and other investments with a notional amount of $ 19.8 million are due within one to five years.

Notes receivables and other investments with a notional amount of $ 25.0 million and a carrying value of $ 12.3 million are convertible into equity securities or are due and payable upon an event of default (as defined in the applicable agreement).

The credit losses, included in Interest and other expense, net, in the consolidated statements of operations, during fiscal year 2023 were $ 34.5 million.

Goodwill and Intangible Assets, Net

The Company tests goodwill and indefinite-lived intangible assets at least annually for possible impairment.

The Company completes the annual testing of impairment for goodwill and indefinite-lived intangible assets on the later of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

January 1 or the first day of each fiscal year.

In addition to its annual test, the Company regularly evaluates whether events or circumstances have occurred that may indicate a potential impairment of goodwill or indefinite-lived intangible assets.

The Company tests goodwill at least annually for possible impairment.

The Company completes the annual testing of impairment for goodwill on the later of January 1 or the first day of each fiscal year.

In addition to its annual test, the Company regularly evaluates whether events or circumstances have occurred that may indicate a potential impairment of goodwill.

The process of testing goodwill for impairment involves the determination of the fair value of the applicable reporting units.

1 unchanged sentence

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.

The Company performed its annual impairment testing for its reporting units as of January 3, 2022 , its annual impairment testing date for fiscal year 2022.

There were no impairments measured in the periods presented.

While the Company believes that its 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 the Company serves, impairment charges against the carrying value of those assets could be required in the future.

The Company performed its annual impairment testing for its

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

reporting units as of January 2, 2023 , its annual impairment testing date for fiscal year 2023.

The Company concluded based on the first step of the process that there was no goodwill impairment.

The changes in the carrying amount of goodwill for fiscal years 2023 and 2022 are as follows:

Discovery & Analytical Solutions Diagnostics Consolidated

Life Sciences Diagnostics Consolidated

(In thousands)

4 unchanged sentences

Foreign currency translation 36,363 15,419 51,782

Acquisitions, earnouts and measurement period adjustments ( 6,926 ) 1,460 ( 5,466 )

Balance at January 1, 2023 $ 4,551,575 $ 1,930,193 $ 6,481,768

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Identifiable intangible asset balances at January 1, 2023 by category and segment were as follows:

Discovery & Analytical Solutions Diagnostics Consolidated

(In thousands)

Patents $ 25,312 $ 2,708 $ 28,020

Accumulated amortization ( 25,099 ) ( 956 ) ( 26,055 )

Net patents 213 1,752 1,965

Trade names and trademarks 76,521 72,932 149,453

Accumulated amortization ( 36,945 ) ( 26,645 ) ( 63,590 )

Net trade names and trademarks 39,576 46,287 85,863

Licenses 54,478 8,136 62,614

Accumulated amortization ( 49,582 ) ( 4,672 ) ( 54,254 )

Net licenses 4,896 3,464 8,360

Core technology 1,080,611 476,129 1,556,740

Accumulated amortization ( 209,247 ) ( 240,442 ) ( 449,689 )

Net core technology 871,364 235,687 1,107,051

Customer relationships 2,123,266 820,495 2,943,761

Accumulated amortization ( 358,402 ) ( 416,702 ) ( 775,104 )

Net customer relationships 1,764,864 403,793 2,168,657

IPRD 5,278 — 5,278

Net amortizable intangible assets $ 2,686,191 $ 690,983 $ 3,377,174

Identifiable intangible asset balances at January 2, 2022 by category and segment were as follows:

Discovery & Analytical Solutions Diagnostics Consolidated

Balance at December 31, 2023 $ 4,587,938 $ 1,945,612 $ 6,533,550

Identifiable intangible asset balances at December 31, 2023 and January 1, 2023 were as follows:

2023 January 1,

(In thousands)

14 unchanged sentences

Net customer relationships 1,963,710 2,168,657

IPRD 5,920 — 5,920

In-process research and development — 5,278

Net amortizable intangible assets $ 3,022,321 $ 3,377,174

Total amortization expense related to definite-lived intangible assets was $ 370.6 million in fiscal year 2022, $ 256.6 million in fiscal year 2021 and $ 161.0 million in fiscal year 2020.

Estimated amortization expense related to definite-lived intangible assets for each of the next five years is $ 363.8 million in fiscal year 2023, $ 355.2 million in fiscal year 2024, $ 334.0 million in fiscal year 2025, $ 327.0 million in fiscal year 2026, and $ 299.6 million in fiscal year 2027.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total amortization expense related to amortizable intangible assets was $ 365.1 million in fiscal year 2023, $ 370.6 million in fiscal year 2022 and $ 256.6 million in fiscal year 2021.

Estimated amortization expense related to amortizable intangible assets for each of the next five years is $ 362.6 million in fiscal year 2024, $ 335.0 million in fiscal year 2025, $ 328.8 million in fiscal year 2026, $ 301.6 million in fiscal year 2027, and $ 275.9 million in fiscal year 2028.

The Company’s debt consisted of the following:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2023

Outstanding Principal Unamortized Debt Discount

4 unchanged sentences

Senior Unsecured Revolving Credit Facility $ — $ — $ ( 1,966 ) $ ( 1,966 )

0.850% Senior Unsecured Notes due in 2024 (“2024 Notes”)

771,659 ( 283 ) ( 3,136 ) 768,240

€500,000 Principal 1.875% Senior Unsecured Notes due in 2026 (“2026 Notes”) 553,450 ( 1,438 ) ( 1,279 ) 550,733

14 unchanged sentences

Total Debt $ 3,927,205 $ ( 4,848 ) $ ( 22,715 ) $ 3,899,642

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

January 1, 2023

Outstanding Principal Unamortized Debt Discount

4 unchanged sentences

Senior Unsecured Revolving Credit Facility $ — $ — $ ( 2,641 ) $ ( 2,641 )

Unsecured Term Loan Credit Facility 500,000 ( 14 ) ( 658 ) 499,328

2024 Notes 771,659 ( 283 ) ( 3,136 ) 768,240

2 unchanged sentences

2029 Notes 850,000 ( 2,000 ) ( 5,537 ) 842,463

2029 Notes 850,000 ( 2,252 ) ( 6,234 ) 841,514

March 2031 Notes 400,000 ( 114 ) ( 2,978 ) 396,908

4 unchanged sentences

Current Portion of Long-term Debt:

0.550% Senior Unsecured Notes due in September 2023 (“2023 Notes”) 467,138 ( 63 ) ( 867 ) 466,208

Other Debt Facilities, current 4,721 — — 4,721

Total Current Portion of Long-Term Debt 471,859 ( 63 ) ( 867 ) 470,929

Total Debt $ 4,429,116 $ ( 6,020 ) $ ( 28,820 ) $ 4,394,276

Senior Unsecured Revolving Credit Facility.

On August 24, 2021, the Company terminated its previous senior unsecured revolving credit facility and entered into a new senior unsecured revolving credit facility with a five-year term and a borrowing capacity o f $ 1.5 billion available through August 24, 2026.

As of January 1, 2023, undrawn letters of credit in the aggregate amount of $ 7.1 million were treated as issued and outstanding when calculating the borrowing availability under the facility.

As of January 1, 2023, the Company had $ 1.49 billion available for additional borrowing under the facility.

On August 24, 2021, the Company entered into a new senior unsecured revolving credit facility with a five-year term and a borrowing capacity o f $ 1.5 billion available through August 24, 2026.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2023, undrawn letters of credit in the aggregate amount of $ 7.1 million were treated as issued and outstanding when calculating the borrowing availability under the facility.

As of December 31, 2023, the Company had $ 1.49 billion available for additional borrowing under the facility.

Borrowings will bear interest, payable quarterly or, if earlier, at the end of an y interest period, at the Company ’ s option at either (a) the base rate (as defined in the credit agreement), or (b) the eurocurrency rate (a publicly published rate), in each case plus a percentage spread based on the credit rating of the Company ’s debt.

2 unchanged sentences

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

In the event that the Company ’ s debt is not rated as investment grade, the debt-to-capital ratio covenant is replaced with leverage ratio and interest coverage ratio covenants.

During the fiscal year 2022, the Company repurchased $ 32.9 million and $ 28.3 million in aggregate principal amount of the 2023 Notes and 2024 Notes, respectively, in open market transactions.

Subsequent to fiscal year 2022, the Company repurchased $ 50.5 million in aggregate principal amount of the 2024 Notes in open market transactions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the maturities of the Company’s indebtedness as of January 1, 2023:

2023 2024 2025 2026 2027 2028 and thereafter Total before unamortized discount and debt issuance costs Unamortized discount and issuance cost Total

In the event that the Company ’ s debt is not rated as investment grade, a debt-to-capital ratio covenant is replaced with leverage ratio and interest coverage ratio covenants.

During the fiscal year 2023, the Company paid in full $ 467.1 million of outstanding 2023 Notes.

During fiscal year 2023, the Company repurchased $ 60.2 million in aggregate principal amount of the 2024 Notes in open market transactions.

At December 31, 2023, the Company had outstanding U.S.

treasury securities with a carrying amou nt of $ 689.9 million w hose proceeds upon maturity are intended to be utilized to repay the outstanding 2024 Notes due in September 2024 (see Note 11).

The following table summarizes the maturities of the Company’s indebtedness as of December 31, 2023:

(In thousands)

Senior Unsecured Revolving Credit Facility $ — $ — $ — $ — $ — $ — $ — $ ( 2,641 ) $ ( 2,641 )

2023 Notes 467,138 — — — — — 467,138 ( 930 ) 466,208

2024 Notes — 771,659 — — — — 771,659 ( 3,419 ) 768,240

2026 Notes — — — 533,950 — — 533,950 ( 3,681 ) 530,269

2028 Notes — — — — — 500,000 500,000 ( 3,932 ) 496,068

2029 Notes — — — — — 850,000 850,000 ( 7,537 ) 842,463

March 2031 Notes — — — — — 400,000 400,000 ( 3,092 ) 396,908

September 2031 Notes — — — — — 500,000 500,000 ( 5,344 ) 494,656

2051 Notes — — — — — 400,000 400,000 ( 4,264 ) 395,736

Other Debt Facilities 4,721 1,200 201 115 89 43 6,369 — 6,369

2024 $ 723,291

2029 and thereafter 2,150,000

Total debt payments 3,927,205

Less unamortized discount and debt issuance costs ( 27,563 )

Total $ 3,899,642

17 unchanged sentences

Savings plan expense was $ 15.0 million in fiscal year 2023, $ 20.0 million in fiscal year 2022, and $ 16.5 million in fiscal year 2021.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Pension Plans:

7 unchanged sentences

plans included the following components for fiscal years ended:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 January 1,

4 unchanged sentences

Expected return on plan assets ( 14,600 ) ( 22,056 ) ( 24,417 )

Actuarial (gain) loss ( 23,706 ) ( 19,514 ) 20,291

Net periodic pension (credit) cost $ ( 28,680 ) $ ( 29,317 ) $ 18,795

Actuarial losses (gains) 9,341 ( 23,706 ) ( 19,514 )

Net periodic pension cost (credit) $ 20,062 $ ( 28,680 ) $ ( 29,317 )

The Company recognizes actuarial gains and losses, unless an interim remeasurement is required, in the fourth quarter of the year in which the gains and losses occur.

4 unchanged sentences

pension plan and the principal non-U.S.

pension plans and the amounts recognized in the Company’s consolidated balance sheets as of January 1, 2023 and January 2, 2022.

The pension liability of the Business at the end of fiscal year 2022 that will transfer upon sale was reclassified to discontinued operations, while the prior year was not restated.

January 1, 2023 January 2, 2022

pension plans and the amounts recognized in the Company’s consolidated balance sheets as of December 31, 2023 and January 1, 2023.

December 31, 2023 January 1, 2023

(In thousands)

7 unchanged sentences

Benefit obligation classified in discontinued operations — — ( 8,261 ) —

Actuarial gains ( 88,724 ) ( 56,919 ) ( 30,705 ) ( 6,218 )

Actuarial losses (gains) 12,871 4,441 ( 88,724 ) ( 56,919 )

Effect of exchange rate changes 8,960 — ( 28,099 ) —

17 unchanged sentences

Actuarial assumptions used to determine net periodic pension cost during the year were as follows:

January 1, 2023 January 2, 2022 January 3, 2021

December 31, 2023 January 1, 2023 January 2, 2022

Discount rate 4.12 % 4.84 % 1.41 % 2.44 % 0.92 % 2.21 %

17 unchanged sentences

Assets of the defined benefit pension plans are primarily equity and debt securities.

Asset allocations as of January 1, 2023 and January 2, 2022, and target asset allocations for fiscal year 2023 are as follows:

Asset allocations as of December 31, 2023 and January 1, 2023, and target asset allocations for fiscal year 2024 are as follows:

Target Allocation Percentage of Plan Assets at

December 31, 2023 January 1, 2023 January 2, 2022

December 29, 2024 December 31, 2023 January 1, 2023

Asset Category Non-U.S.

5 unchanged sentences

The target allocations for plan assets are listed in the above table.

Equity securities primarily include investments in large-cap and mid-cap companies located in the United States and abroad, and equity index funds.

Equity securities primarily include investments in mutual funds with holdings in large-cap and mid-cap companies located in the United States and abroad.

Debt securities include corporate bonds of companies from diversified industries, high-yield bonds, and U.S.

1 unchanged sentence

Other types of investments include investments in non-U.S.

government index linked bonds, multi-strategy hedge funds and venture capital funds that follow several different strategies.

government index linked bonds, multi-strategy hedge funds, venture capital funds and foreign liability driven investments that follow several different strategies.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair value of the Company’s pension plan assets as of January 1, 2023 and January 2, 2022 by asset category, classified in the three levels of inputs described in Note 20 to the consolidated financial statements are as follows:

Fair Value Measurements at January 1, 2023 Using:

The fair value of the Company’s pension plan assets as of December 31, 2023 and January 1, 2023 by asset category, classified in the three levels of inputs described in Note 20 to the consolidated financial statements are as follows:

Fair Value Measurements at December 31, 2023 Using:

Total Carrying

January 1, 2023 Quoted Prices in

December 31, 2023 Quoted Prices in

Active Markets

3 unchanged sentences

(In thousands)

Cash $ 14,483 $ 14,483 $ — $ —

Cash and cash equivalents $ 14,223 $ 14,223 $ — $ —

Equity securities:

5 unchanged sentences

debt instruments 189,318 65,228 124,090 —

Short-term corporate bonds 17,088 — 17,088 —

Other types of investments:

23 unchanged sentences

Valuation techniques utilized need to maximize the use of observable inputs and minimize the use of unobservable inputs.

There have been no changes in the methodologies utilized at January 1, 2023 compared to January 2, 2022.

There have been no changes in the methodologies utilized at December 31, 2023 compared to January 1, 2023.

The following is a description of the valuation techniques utilized to measure the fair value of the assets shown in the table above.

Equity Securities:

Shares of registered investment companies that are publicly traded are categorized as Level 1 assets;

they are valued at quoted market prices that represent the net asset value of the fund.

These instruments have active markets.

Equity index funds are mutual funds that are not publicly traded and are comprised primarily of underlying equity securities that are publicly traded on exchanges.

Price quotes for the assets held by these funds are readily observable and available.

Equity index funds are categorized as Level 2 assets.

Mutual funds held by the Master Trust are open‑ended mutual funds that are registered with the Securities and Exchange Commission.

These funds are required to publish their daily net asset value and to transact at that price.

The mutual funds held by the Master Trust are deemed to be actively traded.

These are categorized as Level 1 assets.

Fixed Income Securities:

Fixed income mutual funds that are publicly traded are valued at quoted market prices that represent the net asset value of securities held by the fund and are categorized as Level 1 assets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fixed income index funds that are not publicly traded are stated at net asset value as determined by the issuer of the fund based on the fair value of the underlying investments and are categorized as Level 2 assets.

Individual fixed income bonds are categorized as Level 2 assets except where sufficient quoted prices exist in active markets, in which case such securities are categorized as Level 1 assets.

Fixed income U.S.

government bonds are valued at quoted market prices and are categorized as Level 1 assets.

Fixed income corporate bond exchange traded funds or individual fixed income corporate bonds are categorized as Level 2 assets except where sufficient quoted prices exist in active markets, in which case such securities are categorized as Level 1 assets.

These securities are valued using third-party pricing services.

1 unchanged sentence

Broker dealer bids or quotes of securities with similar characteristics may also be used.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other Types of Investments:

Hedge funds, private equity funds, foreign real estate funds and venture capital funds are valued at fair value by using the net asset values provided by the investment managers and are updated, if necessary, using analytical procedures, appraisals, public market data and/or inquiry of the investment managers.

The net asset values are determined based upon the fair values of the underlying investments in the funds.

These other investments invest primarily in readily available marketable securities and allocate gains, losses, and expense to the investor based on the ownership percentage as described in the fund agreements.

They are categorized as Level 3 assets.

In September 2021, the Company’s UK pension scheme executed a buy-in contract with Phoenix Life LTD (“Phoenix”), under which the Company made an upfront payment to Phoenix in exchange for Phoenix agreeing to make the benefit payments under the Company’s UK pension scheme due to specified participants and their beneficiaries, thus transferring most of the investment and longevity risk associated with the covered participants and beneficiaries from the Company to Phoenix.

1 unchanged sentence

Like other LDI solutions, it does not eliminate ongoing administrative costs.

These are categorized as Level 3 assets.

The Company’s policy is to recognize significant transfers between levels at the actual date of the event.

A reconciliation of the beginning and ending Level 3 assets for fiscal years 2022, 2021 and 2020 is as follows:

Fair Value Measurements Using

Significant Unobservable Inputs

Foreign liability driven investment Foreign

Funds Multi-strategy

A reconciliation of the beginning and ending Level 3 foreign liability driven investments is as follows:

(In thousands)

Balance at December 30, 2019 $ — $ 22,688 $ 1,721 $ 24,409

Sales — — ( 1,721 ) ( 1,721 )

Unrealized gains — 571 — 571

Balance at January 2, 2022 $ 165,680

Sales — ( 23,115 ) — ( 23,115 )

Purchases 165,680 — — 165,680

Realized losses — ( 226 ) — ( 226 )

Realized gains — 82 — 82

Balance at January 2, 2022 165,680 — — 165,680

Pension benefits paid ( 6,639 )

2 unchanged sentences

Balance at January 1, 2023 95,062

Pension benefits paid ( 6,051 )

Foreign exchange gains 5,957

Return on plan assets 5,698

Balance at December 31, 2023 $ 100,666

With respect to plans outside of the United States, the Company expects to contribute $ 6.9 million in the aggregate during fiscal year 2024.

During fiscal year 2023, the Company contributed $ 10.0 million to its defined benefit pension plan in the United States for the plan year 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:

8 unchanged sentences

Effective July 31, 2000, this plan was closed to new entrants.

At January 1, 2023 and January 2, 2022, the projected benefit obligations were $ 18.9 million and $ 24.1 million, respectively.

Assets with a fair value of $ 0.9 million and $ 1.6 million, segregated in a trust (which is included in marketable securities and investments on the consolidated balance sheets), were available to meet this obligation as of January 1, 2023 and January 2, 2022, respectively.

Pension expenses and income for this plan netted to income of $ 3.2 million in fiscal year 2022, expense of $ 0.2 million in fiscal year 2021 and expense of $ 2.1 million in fiscal year 2020.

At December 31, 2023 and January 1, 2023, the projected benefit obligations were $ 18.6 million and $ 18.9 million, respectively.

Assets with a fair value of $ 0.6 million and $ 0.9 million, segregated in a trust (which is included in marketable securities in the Other assets, net, on the consolidated balance sheets), were available to meet this obligation as of December 31, 2023 and January 1, 2023, respectively.

Pension expenses and income for this plan netted to expense of $ 1.5 million in fiscal year 2023, income of $ 3.2 million in fiscal year 2022 and expense of $ 0.2 million in fiscal year 2021.

Postretirement Medical Plans:

9 unchanged sentences

Assets of the plan are primarily equity and debt securities and are available only to pay retiree health benefits.

The costs of these plans are not material and the net assets in the plans totaled $ 17.1 million and $ 20.7 million at January 1, 2023 and January 2, 2022, respectively.

The costs of these plans are not material and the net assets in the plans totaled $ 18.5 million and $ 17.1 million at December 31, 2023 and January 1, 2023, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Contingencies

1 unchanged sentence

The Company accrues for environmental issues in the accounting period that the Company’s responsibility is established and when the cost can be reasonably estimated.

The Company has accrued $ 12.2 million and $ 11.9 million as of January 1, 2023 and January 2, 2022, respectively, in accrued expenses and other current liabilities, which represents its 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.

The Company has accrued $ 14.1 million and $ 12.2 million as of December 31, 2023 and January 1, 2023, respecti vely, in accrued expenses and other current liabilities, which represents its 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.

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

5 unchanged sentences

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.

The Company is subject to various claims, legal proceedings and investigations covering a wide range of matters that arise in the ordinary course of its business activities.

Although the Company has established accruals for potential losses that it believes are probable and reasonably estimable, in the opinion of the Company’s management, based on its review of the information available at this time, the total cost of resolving these contingencies at January 1, 2023 should not have a material

adverse effect on the Company’s consolidated financial statements.

The Company is subject to various claims, legal proceedings and investigations covering a wide range of matters that arise in the ordinary course of its business activities, including product liability claims.

Legal defense costs are recognized as incurred, and insurance recoveries are recognized when collection is probable.

Although the Company has established accruals for potential losses that it believes are probable and reasonably estimable, in the opinion of the Company’s management, based on its review of the information available at the reporting date, the total cost of resolving these contingencies at December 31, 2023 should not have a material adverse effect on the Company’s consolidated financial statements.

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

5 unchanged sentences

As part of the Company’s compensation programs, the Company also offers shares of its common stock under its Employee Stock Purchase Plan.

The following table summarizes total pre-tax compensation expense recognized related to the Company’s stock options, restricted stock, restricted stock units, performance restricted stock units, performance units and stock grants, included in the Company’s consolidated statements of operations for fiscal years 2022, 2021 and 2020:

2023 January 1,

25 unchanged sentences

Expected stock volatility 32.7 % 28.5 % 27.3 %

The following table summarizes stock option activity for the fiscal year ended January 1, 2023:

The following table summarizes stock option activity for the fiscal year ended December 31, 2023:

Shares Weighted-

8 unchanged sentences

Exercisable at end of year 693 $ 125.06

The aggregate intrinsic value for stock options outstanding at January 1, 2023 was $ 24.4 million with a weighted-average remaining contractual term of 4.7 years.

The aggregate intrinsic value for stock options exercisable at January 1, 2023 was $ 20.1 million with a weighted-average remaining contractual term of 3.6 years.

At January 1, 2023, there were 0.6 million stock options that were expected to vest in the future, with an aggregate intrinsic value of $ 4.3 million and a weighted-average remaining contractual term of 5.6 years.

The aggregate intrinsic value for stock options outstanding at December 31, 2023 was $ 9.4 million with a weighted-average remaining contractual term of 4.1 years.

The aggregate intrinsic value for stock options exercisable at December 31, 2023 was $ 9.3 million with a weighted-average remaining contractual term of 3.4 years.

At December 31, 2023, there were 1.1 million stock options that were vested and expected to vest in the future, with an aggregate intrinsic value of $ 9.4 million and a weighted-average remaining contractual term of 4.1 years.

The weighted-average grant-date fair value of options granted during fiscal years 2023, 2022 and 2021 was $ 45.18 , $ 48.09 , and $ 40.00 per share, respectively.

2 unchanged sentences

The total compensation expense recognized related to the Company’s outstanding options was $ 9.1 million in fiscal year 2023, $ 9.5 million in fiscal year 2022 and $ 5.6 million in fiscal year 2021.

There was $ 15.3 million of total unrecognized compensation cost related to nonvested stock options granted as of January 1, 2023.

There was $ 11.2 million of total unrecognized compensation cost related to nonvested stock options granted as of December 31, 2023.

This cost is expected to be recognized over a weighted-average period of 1.6 years.

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The restricted stock and restricted stock units vest through the passage of time, assuming continued employment.

The fair value of the award at the time of the grant is expensed on a straight line basis primarily in selling, general and administrative expenses over the vesting period, which is generally 3 years.

The fair value of the award at the time of the grant is expensed on a straight-line basis primarily in selling, general

and administrative expenses over the vesting period, which is generally 3 years.

Recipients of the restricted stock have the right to vote such shares and receive dividends.

The following table summarizes restricted stock award activity for the fiscal year ended January 1, 2023:

The following table summarizes restricted stock award activity for the fiscal year ended December 31, 2023:

Shares Weighted-

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The total compensation expense recognized related to the restricted stock awards was $ 28.3 million in fiscal year 2023, $ 34.2 million in fiscal year 2022 and $ 16.3 million in fiscal year 2021.

As of January 1, 2023, there was $ 43.5 million of total unrecognized compensation cost, related to nonvested restricted stock awards.

As of December 31, 2023, there was $ 27.1 million of total unrecognized compensation cost, related to nonvested restricted stock awards.

That cost is expected to be recognized over a weighted-average period of 1.5 years.

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During fiscal year 2021, the Company issued 21,578 shares under this plan at a weighted-average price of $ 168.11 per share.

At January 1, 2023 there remains available for sale to employees an aggregate of 0.7 million shares of the Company’s common stock out of the 5.0 million shares authorized by shareholders for issuance under this plan.

At December 31, 2023 there remains available for sale to employees an aggregate of 0.7 million shares of the Company’s common stock out of the 5.0 million shares authorized by shareholders for issuance under this plan.

Stockholders’ Equity

Comprehensive Income:

The components of accumulated other comprehensive (loss) income consisted of the following:

The components of accumulated other comprehensive income (loss) consisted of the following:

net of tax Unrecognized

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(In thousands)

Balance, December 30, 2019 $ ( 200,437 ) $ 1,052 $ ( 261 ) $ ( 199,646 )

Current year change 169,500 ( 1,799 ) ( 16 ) 167,685

Balance, January 3, 2021 $ ( 30,937 ) $ ( 747 ) $ ( 277 ) $ ( 31,961 )

3 unchanged sentences

Balance, January 1, 2023 ( 446,664 ) ( 798 ) ( 35 ) ( 447,497 )

Current year change 80,172 — ( 181 ) 79,991

Reclassification to retained earnings 90,814 — — 90,814

Balance, December 31, 2023 $ ( 275,678 ) $ ( 798 ) $ ( 216 ) $ ( 276,692 )

During fiscal year 2023, the Company transferred $ 90.8 million from cumulative translation adjustments in AOCI to the gain on sale in the consolidated statement of operations as a result of the sale of the Business.

Stock Repurchases:

On July 22, 2022, the Company’s Board of Directors (the “Board”) authorized the Company to repurchase shares of common stock for an aggregate amount up to $ 300.0 million under a stock repurchase program (the “Repurchase Program”).

On July 22, 2022, the Repurchase Program was terminated by the Board and the Board authorized the Company to repurchase shares of common stock for an aggregate amount up to $ 300.0 million under a new stock repurchase program (the “ New Repurchase Program ” ).

No shares remain available for repurchase under the Repurchase Program due to its termination.

The New Repurchase Pro gram will expire on July 22, 2024 unless terminated earlier by the Board and may be suspended or discontinued at any time.

On April 27, 2023, the Repurchase Program was terminated by the Board and the Board authorized the Company to repurchase shares of common stock for an aggregate amount up to $ 600.0 million under a new stock repurchase program (the “New Repurchase Program”).

The New Repurchase Program will expire on April 26, 2025 unless terminated earlier by the Board and may be suspended or discontinued at any time.

During fiscal year 2023 , the Company repurchased 1,004,544 shares of common stock under the Repurchase Program for an aggregate cost of $ 131.3 million.

During fiscal year 2023 , the Company repurchased 2,159,985 shares of common stock under the New Repurchase Program for an aggregate cost of $ 244.6 million .

As of January 1, 2023, $ 280.9 million remained available for aggregate repurchases of shares under the New Repurchase Program.

As of December 31, 2023, $ 355.4 million remained available for aggregate repurchases of shares under the New Repurchase Program.

In addition, the Board has authorized the Company 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 the Company’s equity incentive plans and to satisfy obligations related to the exercise of stock options made pursuant to the Company’s equity incentive plans.

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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.

The Board declared a regular quarterly cash dividend of $ 0.07 per share in each quarter of fiscal years 2022, 2021 and 2020.

At January 1, 2023, the Company had accrued $ 8.8 million for a dividend declared in October 2022 for the fourth quarter of fiscal year 2022 that was paid in February 2023.

The Board declared a regular quarterly cash dividend of $ 0.07 per share in each quarter of fiscal years 2023, 2022 and 2021, resulting in an annual dividend rate of $ 0.28 per share.

At December 31, 2023, the Company had accrued $ 8.6 million for a dividend declared in October 2023 for the fourth quarter of fiscal year 2023 that was paid in February 2024.

On January 25, 2024 , the Company announced that the Board had declared a quarterly dividend of $ 0.07 per share for the first quarter of fiscal year 2024 that will be payable in May 2024.

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The cash flows related to the settlement of these hedges are included in cash flows from operating activities within the Company’s consolidated statements of cash flows.

Principal hedged currencies include the Australian Dollar, British Pound, Euro, Indian Rupee, Singapore Dollar and Swedish Krona.

Principal hedged currencies include the Chinese Renminbi, British Pound, Euro and Singapore Dollar.

The Company held forward foreign exchange contracts, designated as economic hedges, with U.S.

dollar equivalent notional amounts totaling $ 476.9 million at January 1, 2023 $ 371.9 million at January 2, 2022, and $ 808.0 million at January 3, 2021, and the fair value of these foreign currency derivative contracts was insignificant.

dollar equivalent notional amounts totaling $ 412.1 million at December 31, 2023 and $ 476.9 million at January 1, 2023, and the fair value of these foreign currency

derivative contracts was insignificant.

The gains and losses realized on these foreign currency derivative contracts are not material.

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The cash flows related to the settlement of these hedges are included in cash flows from financing activities within the Company’s consolidated statements of cash flows.

The outstanding forward exchange contracts designated as economic hedges, which were intended to hedge movements in foreign exchange rates prior to the settlement of certain intercompany loan agreements, included combined U.S.

Dollar notional amounts of $ 360.2 million as of January 2, 2022.

The net gains and losses on these derivatives, combined with the gains and losses on the remeasurement of the hedged intercompany loans were not material.

During fiscal year 2018, the Company designated a portion of the 2026 Notes to hedge its investments in certain foreign subsidiaries.

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The cumulative translation gains or losses will remain in AOCI until the foreign subsidiaries are liquidated or sold.

As of January 1, 2023, the total notional amount of the 2026 Notes that was designated to hedge investments in foreign subsidiaries was € 497.2 million.

The unrealized foreign exchange (gains) losses recorded in AOCI related to the ne t investment hedge were $( 34.5 ) million, $( 33.2 ) million and $ 49.6 million during the fiscal years 2022, 2021 and 2020, respectively.

The Company does no t expect any material net pre-tax gains or losses to be reclassified from accumulated other comprehensive (loss) income into interest and other expense, net within the next twelve months.

As of December 31, 2023, the total notional amount of the 2026 Notes that was designated to hedge investments in foreign subsidiaries was € 498.6 million.

The unrealized foreign exchange losses (gains) recorded in AOCI related to the ne t investment hedge were $ 19.5 million, $( 34.5 ) million and $( 33.2 ) million during the fiscal years 2023, 2022 and 2021, respectively.

The Company does no t expect any material net pre-tax gains or losses to be reclassified from accumulated other comprehensive income (loss) into interest and other expense, net within the next twelve months.

Fair Value Measurements

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents, derivatives, marketable securities and accounts receivable.

The Company believes it had no significant concentrations of credit risk as of January 1, 2023.

The Company’s financial assets and liabilities carried at fair value are primarily comprised of marketable securities, derivative contracts used to hedge the Company’s currency risk, and acquisition related contingent consideration.

The Company believes it had no significant concentrations of credit risk as of December 31, 2023.

The Company has not elected to measure any additional financial instruments or other items at fair value.

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In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.

The following tables show the assets and liabilities carried at fair value measured on a recurring basis as of January 1, 2023 and January 2, 2022 classified in one of the three classifications described above:

Fair Value Measurements at January 1, 2023 Using:

The following tables show the assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2023 and January 1, 2023 classified in one of the three classifications described above:

Fair Value Measurements at December 31, 2023 Using:

Total Carrying

Value at January 1, 2023 Quoted Prices in

Value at December 31, 2023 Quoted Prices in

Active Markets

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(In thousands)

Marketable securities $ 11,083 $ 11,083 $ — $ —

Marketable securities - available for sale $ 13,913 $ 13,913 $ — $ —

Foreign exchange derivative assets 1,697 — 1,697 —

Foreign exchange derivative liabilities ( 1,763 ) — ( 1,763 ) —

Contingent consideration ( 46,618 ) — — ( 46,618 )

Contingent consideration asset 14,890 $ — $ — 14,890

Contingent consideration liability ( 40,005 ) — — ( 40,005 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value Measurements at January 1, 2023 Using:

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(In thousands)

Marketable securities $ 33,683 $ 33,683 $ — $ —

Marketable securities - available for sale $ 11,083 $ 11,083 $ — $ —

Foreign exchange derivative assets 2,142 — 2,142 —

Foreign exchange derivative liabilities ( 1,549 ) — ( 1,549 ) —

Contingent consideration ( 57,996 ) — — ( 57,996 )

Contingent consideration liability ( 46,618 ) — — ( 46,618 )

Level 1 and Level 2 Valuation Techniques:

The Company’s Level 1 and Level 2 assets and liabilities are comprised of investments in equity and fixed-income securities as well as derivative contracts.

The Company’s Level 1 and Level 2 assets and liabilities are comprised of investments in equity, fixed-income and U.S.

treasury securities as well as derivative contracts.

For financial assets and liabilities that utilize Level 1 and Level 2 inputs, the Company utilizes both direct and indirect observable price quotes, including common stock price quotes, foreign exchange forward prices and bank price quotes.

Below is a summary of valuation techniques for Level 1 and Level 2 financial assets and liabilities.

Marketable securities:

Include equity and fixed-income securities measured at fair value using the quoted market prices in active markets at the reporting date.

Marketable securities - available for sale:

Includes equ ity and mutual fund investments measured at fair value using the quoted market prices in active markets at the reporting date.

Foreign exchange derivative assets and liabilities:

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Derivative assets and liabilities that can be net settled under these arrangements have been presented in the Company’s consolidated balance sheet on a net basis and are recorded in other assets.

As of both January 1, 2023 and January 2, 2022, none of the master netting arrangements involved collateral.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of both December 31, 2023 and January 1, 2023, none of the master netting arrangements involved collateral.

Level 3 Valuation Techniques:

The Company’s Level 3 liabilities are comprised of contingent consideration related to acquisitions.

For liabilities that utilize Level 3 inputs, the Company uses significant unobservable inputs.

Below is a summary of valuation techniques for Level 3 liabilities.

The Company’s Level 3 assets and liabilities are comprised of contingent consideration related to the sale of the Business (see Note 4) and acquisitions.

For assets and liabilities that utilize Level 3 inputs, the Company uses significant unobservable inputs.

Below is a summary of valuation techniques for Level 3 assets and liabilities.

Contingent consideration:

Contingent consideration is measured at fair value at the acquisition date using projected milestone dates, discount rates, probabilities of success and projected revenues (for revenue-based considerations).

Contingent consideration is measured at fair value at the disposition or acquisition date using projected milestone dates, discount rates, volatility, probabilities of success and projected achievement of financial targets, including revenues of the acquired business in many instances.

Projected risk-adjusted contingent payments are discounted back to the current period using a discounted cash flow model.

The fair values of contingent consideration are calculated on a quarterly basis based on a collaborative effort of the Company’s regulatory, research and development, operations, finance and accounting groups, as appropriate.

Potential valuation adjustments are made as additional information becomes available, including the progress towards achieving proof of concept, regulatory approvals and revenue targets as compared to initial projections, the impact of market competition and market landscape shifts from non-invasive prenatal testing products, with the impact of such adjustments being recorded in the consolidated statements of operations.

As of January 1, 2023, the Company may have to pay contingent consideration, related to acquisitions with open contingency periods that are substantially all revenue-based consideration, of up to $ 106.2 million.

The expected maximum earnout period for acquisitions with open contingency period is 5.9 years from January 1, 2023, and the remaining weighted average expected earnout period at January 1, 2023 was 4.9 years.

A reconciliation of the beginning and ending Level 3 net liabilities for contingent consideration is as follows:

The fair value of the contingent consideration asset was initially measured using a lattice model and recognized upon the sale of the Business on March 13, 2023.

In accordance with the terms of the sale of the Business, the Company is entitled to receive up to $ 150.0 million that is contingent on the exit valuation the Sponsor and its affiliated funds receive on a sale or other capital event related to the Business.

Potential valuation adjustments may be made as additional information and market factors that impact the expected exit valuation of the Business becomes available, with the impact of such adjustments being recorded in the Company’s consolidated statements of operations.

A reconciliation of the beginning and ending Level 3 asset for contingent consideration is as follows:

(In thousands)

Balance at December 29, 2019 $ ( 35,481 )

Amounts paid and foreign currency translation 23,701

Balance at January 1, 2023 $ —

Amount recognized upon the sale of the Business 15,930

Change in fair value (included within selling, general and administrative expenses) ( 1,040 )

Balance at December 31, 2023 $ 14,890

The fair values of contingent consideration liability are routinely updated based on a collaborative effort of the Company’s regulatory, research and development, operations, finance and accounting groups, as appropriate.

As of December 31, 2023, the Company may have to pay contingent consideration, related to acquisitions with open contingency periods that are substantially all revenue-based considerations, of up to $ 98.0 million.

The expected maximum

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

earnout period for acquisitions with open contingency period is 7.9 years from December 31, 2023, and the remaining weighted average expected earnout period at December 31, 2023 was 5.0 years.

A reconciliation of the beginning and ending Level 3 liabilities for contingent consideration is as follows:

(In thousands)

Balance at January 3, 2021 $ ( 2,953 )

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Amounts paid and foreign currency translation 2,562

Adjustments recognized in goodwill 12,400

Purchase accounting adjustments recognized to goodwill 12,400

Change in fair value (included within selling, general and administrative expenses) 1,377

Balance at January 1, 2023 ( 46,618 )

Assets and Liabilities Not Carried at Fair Value

Amounts paid and foreign currency translation 9,741

Change in fair value (included within selling, general and administrative expenses) ( 3,128 )

Balance at December 31, 2023 $ ( 40,005 )

Financial Instruments Not Recorded at Fair Value

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturities of these assets and liabilities.

If measured at fair value, cash and cash equivalents would be classified as Level 1.

The Company’s outstanding senior unsecured notes had an aggregate fair value of $ 3,812.3 million and aggregate carrying value of $ 4,390.5 million as of January 1, 2023.

The Company’s investments in U.S.

treasury securities that are classified as held-to-maturity had a fair value of $ 688.7 million and a carrying value of $ 689.9 million as of December 31, 2023.

The fair value were classified as Level 1.

The Company’s outstanding senior unsecured notes had an aggregate fair value of $ 3,474.5 million and aggregate carrying value of $ 3,889.3 million as of December 31, 2023.

The Company’s outstanding senior unsecured notes had an aggregate fair value of $ 3,812.3 million and aggregate carrying value of $ 4,390.5 million as of January 1, 2023.

The fair values of the outstanding senior unsecured notes were estimated using market quotes from brokers and were based on current rates offered for similar debt, which are Level 2 measurements.

The Company’s other debt facilities, including the Company's senior revolving credit facility and term loan facility, had an aggregate carrying value of $ 3.7 million and $ 504.5 million as of January 1, 2023 and January 2, 2022, respectively.

The Company’s other debt facilities, including the Company’s senior unsecured revolving credit facility, had an aggregate carrying value of $ 10.3 million and $ 3.7 million as of December 31, 2023 and January 1, 2023, respectively.

The carrying value approximates fair value and were classified as Level 2.

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Lease costs from finance leases, short-term leases, variable lease costs and sub-lease income are not material.

Future payments of operating lease liabilities as of January 1, 2023 were as follows:

Future payments of operating lease liabilities as of December 31, 2023 were as follows:

(In thousands)

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The Company discloses information about its operating segments based on the way that management organizes the segments within the Company for making operating decisions and assessing financial performance.

The Company evaluates the performance of its operating segments based on revenue and operating income.

The Company evaluates the performance of its operating segments based on revenue and operating income as adjusted for certain items.

Intersegment revenue and transfers are not significant.

The accounting policies of the operating segments are the same as those described in Note 1.

The principal products and services of the Company’s two operating segments are:

• Discovery & Analytical Solutions .

Provides products and services targeted towards the life sciences and applied markets.

The principal products and services of the Company’s two reportable segments are:

• Life Sciences .

Provides products and services targeted towards the life sciences customers.

• Diagnostics .

Develops diagnostics, tools and applications focused on clinically-oriented customers, especially within the reproductive health, emerging market diagnostics and applied genomics markets.

The Diagnostics segment serves the diagnostics market.

Develops diagnostics, tools and applications focused on clinically-oriented customers, especially within the reproductive health, emerging market diagnostics and applied genomics.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company has included the expenses for its corporate headquarters, such as legal, tax, audit, human resources, information technology, and other management and compliance costs, as well as the activity related to the mark-to-market adjustment on postretirement benefit plans, as “Corporate” below.

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The primary financial measure by which the Company evaluates the performance of its segments is adjusted operating income, which consists of operating income plus amortization of intangible assets, adjustments to operations arising from purchase accounting (primarily adjustments to the fair value of acquired inventory that are subsequently recognized), acquisition and divestiture-related costs, and other costs that are not expected to recur or are of a non-cash nature, including primarily restructuring actions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenue and operating income (loss) from continuing operations by operating segment are shown in the table below for the fiscal years ended:

Revenue and operating income from continuing operations by reportable segment are shown in the table below for the fiscal years ended:

2023 January 1,

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(In thousands)

Discovery & Analytical Solutions $ 1,292,909 $ 897,718 $ 596,585

Life Sciences $ 1,292,340 $ 1,292,909 $ 897,718

Diagnostics 1,459,058 2,019,727 2,932,738

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Segment Operating Income

Discovery & Analytical Solutions $ 503,243 $ 281,602 $ 129,174

Life Sciences $ 489,349 $ 503,243 $ 281,602

Diagnostics 320,928 781,985 1,432,769

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Acquisition and divestiture-related costs ( 69,159 ) ( 39,826 ) ( 62,760 )

Restructuring and other ( 12,953 ) ( 18,228 ) ( 26,700 )

Asset impairment — — ( 3,767 )

Significant litigation matters and settlements ( 12 ) 627 ( 103 )

Significant environmental matters ( 2,457 ) — —

Restructuring and other, net ( 26,601 ) ( 13,580 ) ( 14,358 )

Operating income from continuing operations 300,562 742,699 1,258,457

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Income from continuing operations before income taxes $ 182,976 $ 651,837 $ 1,203,582

Additional information relating to the Company’s reporting segments is as follows for the three fiscal years ended January 1, 2023:

Additional information relating to the Company’s reportable segments is as follows for the three fiscal years ended December 31, 2023:

Depreciation and Amortization Expense Capital Expenditures

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2023 January 2,

2021 January 1,

2022 December 31,

2023 January 1,

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(In thousands) (In thousands)

Discovery & Analytical Solutions $ 263,698 $ 94,700 $ 48,657 $ 41,532 $ 27,818 $ 6,345

Life Sciences $ 276,118 $ 263,698 $ 94,700 $ 35,335 $ 41,532 $ 27,818

Diagnostics 153,099 161,394 214,178 39,894 40,671 57,206

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Continuing operations $ 431,769 $ 427,000 $ 311,443 $ 81,368 $ 85,632 $ 86,020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 January 1,

(In thousands)

Discovery & Analytical Solutions $ 8,330,045 $ 8,478,292

Life Sciences $ 8,401,851 $ 8,330,045

Diagnostics 4,136,305 3,991,659

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Total assets $ 13,564,665 $ 14,129,855

The following geographic area information for continuing operations includes revenue based on location of external customers for the three fiscal years ended January 1, 2023 and net long-lived assets based on physical location as of January 1, 2023 and January 2, 2022:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following geographic area information for continuing operations includes revenue based on location of external customers for the three fiscal years ended December 31, 2023 and net long-lived assets based on physical location as of December 31, 2023 and January 1, 2023:

2023 January 1,

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(1) Long-lived assets consist of property and equipment, net, operating lease right-of-use assets, rental equipment, software and other long-term assets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Quarterly Financial Information (Unaudited)

Selected quarterly financial information is as follows for the fiscal years ended:

Quarter Second

Quarter Third

Quarter Fourth

(In thousands, except per share data)

January 1, 2023

Revenue $ 963,163 $ 895,642 $ 711,803 $ 741,214 $ 3,311,822

Gross profit 594,740 551,717 407,044 436,329 1,989,830

Operating income from continuing operations 261,967 232,486 110,780 137,466 742,699

Income from continuing operations before income taxes 224,904 206,344 82,142 138,447 651,837

Income from continuing operations 184,070 161,601 69,508 97,497 512,676

(Loss) income from discontinued operations ( 7,108 ) 17,611 15,839 30,161 56,503

Net income 176,962 179,212 85,347 127,658 569,179

Basic earnings per share:

Income from continuing operations $ 1.46 $ 1.28 $ 0.55 $ 0.77 $ 4.06

(Loss) income from discontinued operations ( 0.06 ) 0.14 0.13 0.24 0.45

Net income 1.40 1.42 0.68 1.01 4.51

Diluted earnings per share:

Income from continuing operations $ 1.45 $ 1.28 $ 0.55 $ 0.77 $ 4.06

(Loss) income from discontinued operations ( 0.06 ) 0.14 0.13 0.24 0.45

Net income 1.39 1.42 0.67 1.01 4.50

January 2, 2022

Revenue $ 1,027,836 $ 910,747 $ 861,315 $ 1,027,910 $ 3,827,808

Gross profit 693,187 574,143 522,860 643,797 2,433,987

Operating income from continuing operations 455,010 307,999 195,554 299,894 1,258,457

Income from continuing operations before income taxes 467,537 301,329 135,012 299,704 1,203,582

Income from continuing operations 369,859 227,857 107,631 184,089 889,436

Income from discontinued operations 9,446 18,073 20,107 6,095 53,721

Net income 379,305 245,930 127,738 190,184 943,157

Basic earnings per share:

Income from continuing operations $ 3.30 $ 2.03 $ 0.94 $ 1.46 $ 7.66

Income from discontinued operations 0.08 0.16 0.18 0.05 0.46

Net income 3.38 2.19 1.12 1.51 8.12

Diluted earnings per share:

Income continuing operations $ 3.29 $ 2.03 $ 0.94 $ 1.45 $ 7.62

Income from discontinued operations 0.08 0.16 0.17 0.05 0.46

Net income 3.37 2.19 1.11 1.50 8.08

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

1 unchanged sentence

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 8. Financial Statements and Supplementary Data