Document
false--12-31Q220190000031791PERKINELMER INC1.00Contingent 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.0.070.070.070.07113000000003000000001105970001110710001105970001110710000.010.00500.00150.0045The weighted average Eurocurrency interest rate as of June 30, 2019 was 2.36%, resulting in a weighted average effective Eurocurrency rate, including the margin, of 3.46%, which was the interest applicable to the borrowings outstanding under the Eurocurrency rate as of June 30, 2019.Interest on the April 2021 Notes is payable annually on April 9th each year.Interest on the November 2021 Notes is payable semi-annually on May 15th and November 15th each year. Prior to August 15, 2021 (three months prior to their maturity date), the Company may redeem the November 2021 Notes in whole or in part, at its option, at a redemption price equal to the greater of (i) 100% of the principal amount of the November 2021 Notes to be redeemed, plus accrued and unpaid interest, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest in respect to the November 2021 Notes being redeemed, discounted on a semi-annual basis, at the Treasury Rate plus 45 basis points, plus accrued and unpaid interest.The interest rates under the senior unsecured revolving credit facility are based on the Eurocurrency rate or the base rate at the time of borrowing, plus a margin. The base rate is the higher of (i) the rate of interest in effect for such day as publicly announced from time to time by JP Morgan Chase Bank, N.A. as its "prime rate," (ii) the Federal Funds rate plus 50 basis points or (iii) an adjusted one-month Libor plus 1.00%. The Eurocurrency margin as of June 30, 2019 was 110 basis points. Of these bank loans, loans in the aggregate amount of $27.3 million bear fixed interest rates between 1.1% and 4.5% and a loan in the amount of $0.1 million bears a variable interest rate based on the Euribor rate plus a margin of 1.5%The secured bank loans of $0.3 million bear fixed annual interest rates between 1.95% and 5.0% and are required to be repaid in monthly installments until 2027.The unsecured revolving debt facilities had fixed interest at a rate of 2.3%.2026-07-19525211100000010000000000 0000031791 2018-12-31 2019-06-30 0000031791 2019-08-01 0000031791 2019-04-01 2019-06-30 0000031791 2018-01-01 2018-07-01 0000031791 2018-04-02 2018-07-01 0000031791 us-gaap:ProductMember 2019-04-01 2019-06-30 0000031791 us-gaap:ServiceMember 2018-04-02 2018-07-01 0000031791 us-gaap:ProductMember 2018-01-01 2018-07-01 0000031791 us-gaap:ProductMember 2018-12-31 2019-06-30 0000031791 us-gaap:ServiceMember 2018-12-31 2019-06-30 0000031791 us-gaap:ServiceMember 2018-01-01 2018-07-01 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Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________ 
FORM 10-Q
_______________________________________ 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 001-5075
_______________________________________ 
PerkinElmer, Inc.
(Exact name of Registrant as specified in its Charter)
_______________________________________  
Massachusetts
 
04-2052042
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
940 Winter Street,
Waltham,
Massachusetts
 
02451
(Address of principal executive offices)
 
(Zip Code)
(781663-6900
(Registrant’s telephone number, including area code)
______________________________________ 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of exchange on which registered
Common stock, $1 par value per share
PKI
The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer
 
Accelerated filer
 
Non-accelerated filer
 
Smaller reporting company
 
 
 


Emerging growth company

 


Table of Contents

If an emerging growth company, indicate by check mark whether the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of August 1, 2019, there were outstanding 111,076,181 shares of common stock, $1 par value per share.


Table of Contents

TABLE OF CONTENTS
 
 
 
Page
PART I. FINANCIAL INFORMATION
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
 
 
 
 
 
 
Item 3.
 
 
 
Item 4.
 
 
PART II. OTHER INFORMATION
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 6.
 
 
 
 



3

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.
Unaudited Financial Statements

PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) 
 
Three Months Ended
 
Six Months Ended
 
June 30,
2019
 
July 1,
2018
 
June 30,
2019
 
July 1,
2018
 
(In thousands, except per share data)
Product revenue
$
502,114

 
$
495,608

 
$
940,836

 
$
943,216

Service revenue
220,403

 
207,754

 
430,418

 
404,118

Total revenue
722,517

 
703,362

 
1,371,254

 
1,347,334

Cost of product revenue
238,455

 
229,723

 
444,731

 
449,979

Cost of service revenue
136,269

 
133,499

 
270,924

 
264,993

Total cost of revenue
374,724

 
363,222

 
715,655

 
714,972

Selling, general and administrative expenses
201,553

 
204,880

 
400,410

 
404,605

Research and development expenses
48,344

 
47,196

 
96,324

 
93,180

Restructuring and contract termination charges, net
6,161

 

 
13,800

 
6,578

Operating income from continuing operations
91,735

 
88,064

 
145,065

 
127,999

Interest and other expense, net
19,908

 
16,356

 
36,473

 
27,786

Income from continuing operations before income taxes
71,827

 
71,708

 
108,592

 
100,213

Provision for income taxes
2,686

 
7,035

 
3,998

 
9,505

Income from continuing operations
69,141

 
64,673

 
104,594

 
90,708

Loss on disposition of discontinued operations before income taxes

 
(551
)
 

 
(551
)
Provision for income taxes on discontinued operations and dispositions
54

 
59

 
95

 
70

Loss from discontinued operations and dispositions
(54
)
 
(610
)
 
(95
)
 
(621
)
Net income
$
69,087

 
$
64,063

 
$
104,499

 
$
90,087

Basic earnings per share:
 
 
 
 
 
 
 
Income from continuing operations
$
0.62

 
$
0.59

 
$
0.94

 
$
0.82

Loss from discontinued operations and dispositions
(0.00
)
 
(0.01
)
 
(0.00
)
 
(0.01
)
Net income
$
0.62

 
$
0.58

 
$
0.94

 
$
0.82

Diluted earnings per share:
 
 
 
 
 
 
 
Income from continuing operations
$
0.62

 
$
0.58

 
$
0.94

 
$
0.81

Loss from discontinued operations and dispositions
(0.00
)
 
(0.01
)
 
(0.00
)
 
(0.01
)
Net income
$
0.62

 
$
0.57

 
$
0.94

 
$
0.81

Weighted average shares of common stock outstanding:
 
 
 
 
 
 
 
Basic
110,845

 
110,477

 
110,694

 
110,386

Diluted
111,528

 
111,452

 
111,411

 
111,391

Cash dividends declared per common share
$
0.07

 
$
0.07

 
$
0.14

 
$
0.14

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

4

Table of Contents

PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
2019
 
July 1,
2018
 
June 30,
2019
 
July 1,
2018
 
(In thousands)
Net income
$
69,087

 
$
64,063

 
$
104,499

 
$
90,087

Other comprehensive income (loss):
 
 
 
 
 
 
 
Foreign currency translation adjustments
(7,320
)
 
(102,592
)
 
(4,254
)
 
(84,093
)
Unrealized gain (loss) on securities, net of tax
103

 
4

 
(17
)
 
45

Other comprehensive loss
(7,217
)
 
(102,588
)
 
(4,271
)
 
(84,048
)
Comprehensive income (loss)
$
61,870

 
$
(38,525
)
 
$
100,228

 
$
6,039











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

5

Table of Contents

PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 
June 30,
2019
 
December 30,
2018
 
(In thousands, except share and per share data)
Current assets:
 
 
 
Cash and cash equivalents
$
150,016

 
$
163,111

Accounts receivable, net
654,454

 
632,669

Inventories
414,330

 
338,347

Other current assets
118,961

 
100,507

Total current assets
1,337,761

 
1,234,634

Property, plant and equipment:
 
 
 
At cost
670,821

 
680,183

Accumulated depreciation
(368,101
)
 
(361,593
)
Property, plant and equipment, net
302,720

 
318,590

Operating lease right-of-use assets

187,934

 

Intangible assets, net
1,282,440

 
1,199,667

Goodwill
3,042,049

 
2,952,608

Other assets, net
246,168

 
270,023

Total assets
$
6,399,072

 
$
5,975,522

Current liabilities:
 
 
 
Current portion of long-term debt
$
8,205

 
$
14,856

Accounts payable
188,051

 
220,949

Accrued restructuring and contract termination charges
10,987

 
4,834

Accrued expenses and other current liabilities
497,426

 
528,827

Current liabilities of discontinued operations
2,130

 
2,165

Total current liabilities
706,799

 
771,631

Long-term debt
2,104,466

 
1,876,624

Long-term liabilities
716,929

 
742,312

Operating lease liabilities

164,011

 

Total liabilities
3,692,205

 
3,390,567

Commitments and contingencies (see Note 19)

 

Stockholders’ equity:
 
 
 
Preferred stock—$1 par value per share, authorized 1,000,000 shares; none issued or outstanding

 

Common stock—$1 par value per share, authorized 300,000,000 shares; issued and outstanding 111,071,000 shares and 110,597,000 shares at June 30, 2019 and at December 30, 2018, respectively
111,071

 
110,597

Capital in excess of par value
72,181

 
48,772

Retained earnings
2,704,367

 
2,602,067

Accumulated other comprehensive loss
(180,752
)
 
(176,481
)
Total stockholders’ equity
2,706,867

 
2,584,955

Total liabilities and stockholders’ equity
$
6,399,072

 
$
5,975,522

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

6

Table of Contents

PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

 
 
For the Six-Month Period Ended June 30, 2019
 
Common
Stock
Amount
 
Capital in
Excess of
Par Value
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Stockholders’
Equity
 
(In thousands)
Balance, December 30, 2018
$
110,597

 
$
48,772

 
$
2,602,067

 
$
(176,481
)
 
$
2,584,955

Impact of adopting ASC 842 (see Note 1)


 

 
13,289

 

 
13,289

Net income

 

 
35,412

 

 
35,412

Other comprehensive income

 

 

 
2,946

 
2,946

Dividends

 

 
(7,742
)
 

 
(7,742
)
Exercise of employee stock options and related income tax benefits
186

 
8,424

 

 

 
8,610

Issuance of common stock for employee stock purchase plans
19

 
1,367

 

 

 
1,386

Purchases of common stock
(57
)
 
(5,236
)
 

 

 
(5,293
)
Issuance of common stock for long-term incentive program
146

 
3,392

 

 

 
3,538

Stock compensation

 
1,371

 

 

 
1,371

Balance, March 31, 2019
$
110,891

 
$
58,090

 
$
2,643,026

 
$
(173,535
)
 
$
2,638,472

Net income

 

 
69,087

 

 
69,087

Other comprehensive income

 

 

 
(7,217
)
 
(7,217
)
Dividends

 

 
(7,746
)
 

 
(7,746
)
Exercise of employee stock options and related income tax benefits
167

 
7,777

 

 

 
7,944

Issuance of common stock for employee stock purchase plans
15

 
1,387

 

 

 
1,402

Purchases of common stock
(7
)
 
(757
)
 

 

 
(764
)
Issuance of common stock for long-term incentive program
5

 
4,384

 

 

 
4,389

Stock compensation

 
1,300

 

 

 
1,300

Balance, June 30, 2019
$
111,071

 
$
72,181

 
$
2,704,367

 
$
(180,752
)
 
$
2,706,867




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For the Six-Month Period Ended July 1, 2018
 
Common
Stock
Amount
 
Capital in
Excess of
Par Value
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Stockholders’
Equity
 
(In thousands)
Balance, December 31, 2017
$
110,361

 
$
58,828

 
$
2,380,517

 
$
(46,518
)
 
$
2,503,188

Cumulative effect of adopting ASC 606


 

 
10,209

 

 
10,209

Impact of adopting ASU 2016-16


 

 
(2,062
)
 

 
(2,062
)
Net income

 

 
26,024

 

 
26,024

Other comprehensive income

 

 

 
18,540

 
18,540

Dividends

 

 
(7,736
)
 

 
(7,736
)
Exercise of employee stock options and related income tax benefits
173

 
7,295

 

 

 
7,468

Issuance of common stock for employee stock purchase plans

 

 

 

 

Purchases of common stock
(58
)
 
(4,444
)
 

 

 
(4,502
)
Issuance of common stock for long-term incentive program
144

 
2,741

 

 

 
2,885

Stock compensation

 
1,238

 

 

 
1,238

Balance, April 1, 2018
$
110,620

 
$
65,658

 
$
2,406,952

 
$
(27,978
)
 
$
2,555,252

Net income

 

 
64,063

 

 
64,063

Other comprehensive income

 

 

 
(102,588
)
 
(102,588
)
Dividends

 

 
(7,728
)
 

 
(7,728
)
Exercise of employee stock options and related income tax benefits
21

 
859

 

 

 
880

Issuance of common stock for employee stock purchase plans
21

 
1,462

 

 

 
1,483

Purchases of common stock
(1
)
 
(93
)
 

 

 
(94
)
Issuance of common stock for long-term incentive program
55

 
4,512

 

 

 
4,567

Stock compensation

 
1,342

 

 

 
1,342

Balance, July 1, 2018
$
110,716

 
$
73,740

 
$
2,463,287

 
$
(130,566
)
 
$
2,517,177




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


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Table of Contents

PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six Months Ended
 
June 30,
2019
 
July 1,
2018
 
(In thousands)
Operating activities:
 
 
 
Net income
$
104,499

 
$
90,087

Loss from discontinued operations and dispositions, net of income taxes
95

 
621

Income from continuing operations
104,594

 
90,708

Adjustments to reconcile income from continuing operations to net cash used in continuing operations:
 
 
 
Stock-based compensation
12,801

 
12,148

Restructuring and contract termination charges, net
13,800

 
6,578

Depreciation and amortization
103,793

 
88,225

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

 

Change in fair value of contingent consideration
3,161

 
7,065

Amortization of deferred debt financing costs and accretion of discount
1,790

 
1,519

Amortization of acquired inventory revaluation
5,565

 
18,160

Changes in assets and liabilities which provided (used) cash, excluding effects from companies acquired:
 
 
 
Accounts receivable, net
(9,604
)
 
(18,768
)
Inventories
(50,450
)
 
(42,993
)
Accounts payable
(39,951
)
 
(24,384
)
Accrued expenses and other
(106,425
)
 
(79,831
)
Net cash provided by operating activities of continuing operations
41,543

 
58,427

Net cash provided by operating activities of discontinued operations

 

Net cash provided by operating activities
41,543

 
58,427

Investing activities:
 
 
 
Capital expenditures
(36,461
)
 
(39,608
)
Purchases of investments
(868
)
 

Purchases of licenses
(5,000
)
 

Proceeds from disposition of businesses
550

 
173

Proceeds from surrender of life insurance policies

 
72

Activity related to acquisitions and investments, net of cash and cash equivalents acquired
(244,738
)
 
(40,557
)
Net cash used in investing activities of continuing operations
(286,517
)
 
(79,920
)
Net cash provided by investing activities of discontinued operations

 

Net cash used in investing activities
(286,517
)
 
(79,920
)
Financing activities:
 
 
 
Payments on borrowings
(578,000
)
 
(667,000
)
Proceeds from borrowings
849,550

 
342,000

Proceeds from sale of senior debt

 
369,340

Payments of debt financing costs
(181
)
 
(2,634
)
Settlement of cash flow hedges
(1,659
)
 
(32,711
)
Net payments on other credit facilities
(9,806
)
 
(10,154
)
Payments for acquisition-related contingent consideration
(23,700
)
 

Proceeds from issuance of common stock under stock plans
16,554

 
8,348

Purchases of common stock
(6,057
)
 
(4,649
)
Dividends paid
(15,507
)
 
(15,471
)
Net cash provided by (used in) financing activities of continuing operations
231,194

 
(12,931
)
Net cash provided by financing activities of discontinued operations

 

Net cash provided by (used in) financing activities
231,194

 
(12,931
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
685

 
(4,351
)
Net decrease in cash, cash equivalents and restricted cash
(13,095
)
 
(38,775
)
Cash, cash equivalents and restricted cash at beginning of period
166,315

 
202,371

Cash, cash equivalents and restricted cash at end of period
$
153,220

 
$
163,596

 
 
 
 
Supplemental disclosures of cash flow information
 
 
 
Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total shown in the condensed consolidated statements of cash flows:

 
 
 
Cash and cash equivalents
150,016

 
163,392

Restricted cash included in other current assets
3,204

 
204

Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows
$
153,220

 
$
163,596

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

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Table of Contents

PERKINELMER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1: Basis of Presentation
 
The condensed consolidated financial statements included herein have been prepared by PerkinElmer, Inc. (the “Company”), in accordance with accounting principles generally accepted in the United States of America (the “U.S.” or the "United States") and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information in the footnote disclosures of the financial statements has been condensed or omitted where it substantially duplicates information provided in the Company’s latest audited consolidated financial statements, in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in its Annual Report on Form 10-K for the fiscal year ended December 30, 2018, filed with the SEC (the “2018 Form 10-K”). The balance sheet amounts at December 30, 2018 in this report were derived from the Company’s audited 2018 consolidated financial statements included in the 2018 Form 10-K. The condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods indicated. The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and classifications of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for the three and six months ended June 30, 2019 and July 1, 2018, respectively, are not necessarily indicative of the results for the entire fiscal year or any future period.
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. The fiscal year ending December 29, 2019 ("fiscal year 2019") will include 52 weeks, and the fiscal year ended December 30, 2018 ("fiscal year 2018") included 52 weeks.
Recently Adopted and Issued Accounting Pronouncements: From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the "FASB") and are adopted by the Company as of the specified effective dates. 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 April 2019, the FASB issued Accounting Standards Update No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments ("ASU 2019-04"). ASU 2019-04 clarifies certain aspects of previously issued accounting standards related to: (1) ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements ("ASU 2016-13"), in areas of accrued interest receivable, transfers of loans and debt securities between classifications, recoveries and prepayments, (2) ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"), in areas of partial-term fair value hedges, fair value hedge basis adjustments, certain disclosures and transition requirements and (3) ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"), in areas of remeasurement of equity securities under ASC 820, Fair Value Measurement, when using the measurement alternative and remeasurement of equity securities at historical exchange rates. The amendments related to ASU 2016-13 are required to be adopted in conjunction with that accounting standards update, as further described below. Since the Company has already adopted ASU 2017-12 and ASU 2016-01, the related amendments in ASU 2019-04 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted in any interim period. The amendments to ASU 2017-12 can either be adopted retrospectively as of the date of adoption of ASU 2017-12 or they can be adopted prospectively. The amendments to ASU 2016-01 are required to be applied using a modified-retrospective adoption approach with a cumulative-effect adjustment to retained earnings as of the date of adoption of ASU 2016-01, except for those related to equity securities without readily determinable fair values that are measured using the measurement alternative, which are required to be applied prospectively. The Company is currently evaluating the requirements of ASU 2019-04 and has not yet determined the impact of its adoption on the Company's consolidated financial position, results of operations and cash flows.
In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract ("ASU 2018-15"). ASU 2018-15 aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software (and hosting arrangements that include an internal-use software license). The provisions of this guidance are to be applied either retrospectively or prospectively to all implementation costs incurred after the date of

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adoption. ASU 2018-15 is effective for annual reporting periods beginning after December 15, 2019, and interim periods within those years with early adoption permitted. The Company is currently evaluating the requirements of this guidance and has not yet determined the impact of its adoption on the Company's consolidated financial position, results of operations and cash flows.
In August 2018, the FASB issued Accounting Standards Update No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14"). ASU 2018-14 adds, removes, and clarifies disclosure requirements related to defined benefit pension and other postretirement plans. ASU 2018-14 adds requirements for an entity to disclose the weighted-average interest crediting rates used in the entity’s cash balance pension plans and other similar plans; and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. Further, ASU 2018-14 removes guidance that currently requires the following disclosures: the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year; the amount and timing of plan assets expected to be returned to the employer; information about (1) benefits covered by related-party insurance and annuity contracts and (2) significant transactions between the plan and related parties; and the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost, and the benefit obligation for postretirement health care benefits. ASU 2018-14 also clarifies the guidance in Compensation-Retirement Benefits (Topic 715-20-50-3) on defined benefit plans to require disclosure of (1) the projected benefit obligation ("PBO") and fair value of plan assets for pension plans with PBOs in excess of plan assets (the same disclosure with reference to the accumulated postretirement benefit obligation rather than the PBO is required for other postretirement benefit plans) and (2) the accumulated benefit obligation ("ABO") and fair value of plan assets for pension plans with ABOs in excess of plan assets. The provisions of this guidance are to be applied retrospectively to all periods presented upon their effective date. ASU 2018-14 is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those years with early adoption permitted. The Company is currently evaluating the requirements of this guidance and has not yet determined the impact of its adoption on the Company's consolidated financial position, results of operations and cash flows.
In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). ASU 2018-13 adds, removes, and modifies certain disclosures related to fair value measurements. ASU 2018-13 adds requirements for an entity to disclose the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. Further, ASU 2018-13 removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. ASU 2018-13 also modifies existing disclosure requirements related to measurement uncertainty. The amendments regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments are to be applied retrospectively to all periods presented upon their effective date. ASU 2018-13 is effective for annual reporting periods beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted for any removed or modified disclosures. The Company is currently evaluating the requirements of this guidance and has not yet determined the impact of its adoption on the Company's consolidated financial position, results of operations and cash flows.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard requires entities to use the expected loss impairment model and will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance sheet credit exposures. Entities are required to estimate the lifetime “expected credit loss” for each applicable financial asset and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard also amends the impairment model for available-for-sale (“AFS”) debt securities and requires entities to determine whether all or a portion of the unrealized loss on an AFS debt security is a credit loss. An entity will recognize an allowance for credit losses on an AFS debt security as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment. The provisions of this guidance are to be applied using a modified-retrospective approach. A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. Subsequent to the issuance of ASU 2016-13, in November 2018, the FASB issued Accounting Standards Update No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses ("ASU 2018-19"), in April 2019, the FASB issued ASU 2019-04, and in May 2019, the FASB issued Accounting Standards Update No. 2019-05, Financial Instruments - Credit Losses (Topic 326), Targeted Transition Relief ("ASU

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2019-05"). The amendments in ASU 2018-19 clarify that receivables arising from operating leases are not within the scope of Subtopic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. The amendments in ASU 2019-04 clarify the measurement of allowance for credit losses on accrued interest receivable; the inclusion of expected recoveries in the allowance for credit losses; the permission of a prepayment-adjusted effective interest rate when determining the allowance for credit losses; and the steps entities should take when recording the transfer of loans or debt securities between measurement classifications. The amendments in ASU 2019-05 provide an option to irrevocably elect the fair value option in Subtopic 825-10, Financial Instruments-Overall, on an instrument-by-instrument basis, for eligible financial assets measured at amortized cost basis upon adoption of ASU 2016-13, but this fair value option election does not apply to held-to-maturity debt securities. The effective date and transition requirements for the amendments in ASU 2018-19, ASU 2019-04 and ASU 2019-05 are the same as the effective date and transition requirements of ASU 2016-13, which is effective for annual reporting periods beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. The Company is currently evaluating the requirements of this guidance and has not yet determined the impact of its adoption on the Company's consolidated financial position, results of operations and cash flows.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease of assets will primarily depend on its classification as a finance or operating lease. ASU 2016-02 also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The provisions of this guidance are effective for annual periods beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. ASU 2016-02 is to be applied using a modified retrospective approach. Subsequent to the issuance of ASU 2016-02, in July 2018, the FASB issued Accounting Standards Update No. 2018-10, Codification Improvements to Topic 842, Leases ("ASU 2018-10") and Accounting Standards Update No. 2018-11, Leases (Topic 842): Targeted Improvements ("ASU 2018-11"), and in March 2019, the FASB issued Accounting Standards Update No. 2019-01, Leases (Topic 842): Codification Improvements ("ASU 2019-01"). The amendments in ASU 2018-10 clarify, correct or remove inconsistencies in the guidance provided under ASU 2016-02 related to sixteen specific issues identified. The amendments in ASU 2018-11 provide entities with an additional (and optional) transition method to adopt the new leases standard. Under the new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity's reporting for the comparative periods presented in the financial statements in the period of adoption will continue to be in accordance with Accounting Standards Codification (“ASC”) 840, Leases ("ASC 840"). An entity that elects this additional (and optional) transition method must provide the required disclosures under ASC 840 for all periods that continue to be in accordance with ASC 840. ASU 2018-11 also provides lessors with a practical expedient, by class of underlying asset, to not separate nonlease components from the associated lease component and, instead, to account for those components as a single component if certain criteria are met. ASU 2019-01 provides clarification on implementation issues associated with adopting ASU 2016-02. ASU 2019-01 provides guidance on transition disclosures related to Topic 250, Accounting Changes and Error Corrections, specifically paragraph 205-10-50-3, which requires entities to provide in the fiscal year in which a new accounting principle is adopted the identical disclosures for interim periods after the date of adoption. The guidance in ASU 2019-01 explicitly provides an exception to the paragraph 250-10-50-3 interim disclosure requirements in the Topic 842 transition disclosure requirements. The effective date and transition requirements for these standards are the same as the effective date and transition requirements of ASU 2016-02. The standards were effective for the Company beginning on December 31, 2018, the first day of the Company's fiscal year 2019. The Company did not early adopt these standards and adopted these standards using the optional transition method.
The Company applied the modified retrospective approach, and applied the new leases standards at December 31, 2018, with a cumulative effect adjustment recognized in the opening balance of retained earnings in fiscal year 2019. As a lessee, the most significant impact of the standards relates to the recognition of the right-of-use assets and lease liabilities for the operating leases in the balance sheet. In addition, the Company had deferred gains from sale-leaseback transactions that are being amortized in operating expenses over the lease terms and the leases are accounted for as operating leases under ASC 840. Under the new standards, the Company recognized the deferred gains from the sales as a cumulative effect adjustment in retained earnings at December 31, 2018. The Company also derecognized the impact of its build-to-suit arrangements in which the Company was the deemed owner during the construction period, for which the construction is complete and the lease commenced before the initial date of adoption. The adoption of the standards resulted in an increase in retained earnings at December 31, 2018 of approximately $13.3 million for the cumulative effect of initially applying the standards as of that date. In addition, the adoption of the standards resulted in the recognition of right-of-use assets of approximately $199.5 million and lease liabilities of approximately $147.1 million, primarily related to the facilities operating leases, a decrease in property and equipment of approximately $34.6 million and an increase in deferred tax liabilities of $4.6 million for the tax impact of the

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cumulative adjustments. The adoption did not have an impact to cash from or used in operating, investing or financing activities in the Company's consolidated statement of cash flows at December 31, 2018.

Note 2: Revenue

Disaggregation of revenue
In the following tables, revenue is disaggregated by primary geographical markets, primary end-markets and timing of revenue recognition. The tables also include a reconciliation of the disaggregated revenue with the reportable segments revenue.

 
Reportable Segments
 
Three Months Ended
 
June 30, 2019
 
July 1, 2018
 
Discovery & Analytical Solutions
 
Diagnostics
 
Total
 
Discovery & Analytical Solutions
 
Diagnostics
 
Total
 
(In thousands)
Primary geographical markets
 
 
 
 
 
 
 
 
 
 
 
Americas
$
177,974

 
$
105,636

 
$
283,610

 
$
170,973

 
$
98,395

 
$
269,368

Europe
123,809

 
72,646

 
196,455

 
127,646

 
69,700

 
197,346

Asia
132,184

 
110,268

 
242,452

 
132,009

 
104,639

 
236,648

 
$
433,967

 
$
288,550

 
$
722,517

 
$
430,628

 
$
272,734

 
$
703,362

 
 
 
 
 
 
 
 
 
 
 
 
Primary end-markets
 
 
 
 
 
 
 
 
 
 
 
Diagnostics
$

 
$
288,550

 
$
288,550

 
$

 
$
272,734

 
$
272,734

Life sciences
241,862

 

 
241,862

 
233,906

 

 
233,906

Applied markets
192,105

 

 
192,105

 
196,722

 

 
196,722

 
$
433,967

 
$
288,550

 
$
722,517

 
$
430,628

 
$
272,734

 
$
703,362

 
 
 
 
 
 
 
 
 
 
 
 
Timing of revenue recognition
 
 
 
 
 
 
 
 
 
 
 
Products and services transferred at a point in time
$
316,713

 
$
267,450

 
$
584,163

 
$
312,994

 
$
252,463

 
$
565,457

Services transferred over time
117,254

 
21,100

 
138,354

 
117,634

 
20,271

 
137,905

 
$
433,967

 
$
288,550

 
$
722,517

 
$
430,628

 
$
272,734

 
$
703,362



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Reportable Segments
 
Six Months Ended
 
June 30, 2019
 
July 1, 2018
 
Discovery & Analytical Solutions
 
Diagnostics
 
Total
 
Discovery & Analytical Solutions
 
Diagnostics
 
Total
 
(In thousands)
Primary geographical markets
 
 
 
 
 
 
 
 
 
 
 
Americas
$
340,391

 
$
203,644

 
$
544,035

 
$
328,467

 
$
186,929

 
$
515,396

Europe
231,415

 
138,504

 
369,919

 
247,019

 
137,412

 
384,431

Asia
250,994

 
206,306

 
457,300

 
251,667

 
195,840

 
447,507

 
$
822,800

 
$
548,454

 
$
1,371,254

 
$
827,153

 
$
520,181

 
$
1,347,334

 
 
 
 
 
 
 
 
 
 
 
 
Primary end-markets