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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 April 5, 2020
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) |
(781) 663-6900
(Registrant’s telephone number, including area code)
______________________________________
Securities registered pursuant to Section 12(b) of the Act:
|
| | |
Title of each class | Trading Symbol (s) | Name of each exchange on which registered |
Common stock, $1 par value per share | PKI | The New York Stock Exchange |
1.875% Notes due 2026 | PKI 21A | The New York Stock Exchange |
0.60% Notes due 2021 | PKI 21B | 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
| | ☐ |
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 May 7, 2020, there were outstanding 111,386,181 shares of common stock, $1 par value per share.
TABLE OF CONTENTS
|
| | |
| | Page |
PART I. FINANCIAL INFORMATION |
| | |
Item 1. | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Item 2. | | |
| | |
| | |
| | |
| | |
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| | |
| | |
| | |
| | |
Item 3. | | |
| | |
Item 4. | | |
| |
PART II. OTHER INFORMATION | |
| | |
Item 1. | | |
| | |
Item 1A. | | |
| | |
Item 2. | | |
| | |
Item 6. | | |
| |
| |
| |
PART I. FINANCIAL INFORMATION
| |
Item 1. | Unaudited Financial Statements |
PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
| | | | | | | |
| Three Months Ended |
| April 5, 2020 | | March 31, 2019 |
| (In thousands, except per share data) |
Product revenue | $ | 425,529 |
| | $ | 438,722 |
|
Service revenue | 226,867 |
| | 210,015 |
|
Total revenue | 652,396 |
| | 648,737 |
|
Cost of product revenue | 206,190 |
| | 206,276 |
|
Cost of service revenue | 138,183 |
| | 134,655 |
|
Total cost of revenue | 344,373 |
| | 340,931 |
|
Selling, general and administrative expenses | 208,569 |
| | 198,857 |
|
Research and development expenses | 48,914 |
| | 47,980 |
|
Restructuring and other costs, net | 5,858 |
| | 7,639 |
|
Operating income from continuing operations | 44,682 |
| | 53,330 |
|
Interest and other expense, net | 9,993 |
| | 16,565 |
|
Income from continuing operations before income taxes | 34,689 |
| | 36,765 |
|
Provision for income taxes | 974 |
| | 1,312 |
|
Income from continuing operations | 33,715 |
| | 35,453 |
|
Loss on disposition of discontinued operations before income taxes | — |
| | — |
|
Provision for income taxes on discontinued operations and dispositions | 50 |
| | 41 |
|
Loss from discontinued operations and dispositions | (50 | ) | | (41 | ) |
Net income | $ | 33,665 |
| | $ | 35,412 |
|
Basic earnings per share: | | | |
Income from continuing operations | $ | 0.30 |
| | $ | 0.32 |
|
Loss from discontinued operations and dispositions | (0.00 | ) | | (0.00 | ) |
Net income | $ | 0.30 |
| | $ | 0.32 |
|
Diluted earnings per share: | | | |
Income from continuing operations | $ | 0.30 |
| | $ | 0.32 |
|
Loss from discontinued operations and dispositions | (0.00 | ) | | (0.00 | ) |
Net income | $ | 0.30 |
| | $ | 0.32 |
|
Weighted average shares of common stock outstanding: | | | |
Basic | 111,121 |
| | 110,543 |
|
Diluted | 111,644 |
| | 111,293 |
|
Cash dividends declared per common share | $ | 0.07 |
| | $ | 0.07 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
| | | | | | | |
| Three Months Ended |
| April 5, 2020 | | March 31, 2019 |
| (In thousands) |
Net income | $ | 33,665 |
| | $ | 35,412 |
|
Other comprehensive loss: | | | |
Foreign currency translation adjustments | (78,593 | ) | | 3,066 |
|
Unrealized loss on securities, net of tax | (88 | ) | | (120 | ) |
Other comprehensive (loss) income | (78,681 | ) | | 2,946 |
|
Comprehensive (loss) income | $ | (45,016 | ) | | $ | 38,358 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| | | | | | | |
| April 5, 2020 | | December 29, 2019 |
| (In thousands, except share and per share data) |
Current assets: | | | |
Cash and cash equivalents | $ | 195,146 |
| | $ | 191,877 |
|
Accounts receivable, net | 626,150 |
| | 725,184 |
|
Inventories | 393,164 |
| | 356,937 |
|
Other current assets | 127,366 |
| | 100,381 |
|
Total current assets | 1,341,826 |
| | 1,374,379 |
|
Property, plant and equipment: | | | |
At cost | 703,266 |
| | 701,580 |
|
Accumulated depreciation | (389,409 | ) | | (383,357 | ) |
Property, plant and equipment, net | 313,857 |
| | 318,223 |
|
Operating lease right-of-use assets
| 196,319 |
| | 167,276 |
|
Intangible assets, net | 1,200,288 |
| | 1,283,286 |
|
Goodwill | 3,051,694 |
| | 3,111,227 |
|
Other assets, net | 280,412 |
| | 284,173 |
|
Total assets | $ | 6,384,396 |
| | $ | 6,538,564 |
|
Current liabilities: | | | |
Current portion of long-term debt | $ | 9,654 |
| | $ | 9,974 |
|
Accounts payable | 233,227 |
| | 235,855 |
|
Short-term accrued restructuring and other costs | 11,298 |
| | 11,559 |
|
Accrued expenses and other current liabilities | 473,853 |
| | 503,332 |
|
Current liabilities of discontinued operations | 2,112 |
| | 2,112 |
|
Total current liabilities | 730,144 |
| | 762,832 |
|
Long-term debt | 2,010,525 |
| | 2,064,041 |
|
Long-term liabilities | 704,154 |
| | 751,468 |
|
Operating lease liabilities
| 179,827 |
| | 146,399 |
|
Total liabilities | 3,624,650 |
| | 3,724,740 |
|
Commitments and contingencies (see Note 18) |
| |
|
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 111,306,000 shares and 111,140,000 shares at April 5, 2020 and December 29, 2019, respectively | 111,306 |
| | 111,140 |
|
Capital in excess of par value | 90,236 |
| | 90,357 |
|
Retained earnings | 2,836,531 |
| | 2,811,973 |
|
Accumulated other comprehensive loss | (278,327 | ) | | (199,646 | ) |
Total stockholders’ equity | 2,759,746 |
| | 2,813,824 |
|
Total liabilities and stockholders’ equity | $ | 6,384,396 |
| | $ | 6,538,564 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| For the Three-Month Period Ended April 5, 2020 |
| Common Stock Amount | | Capital in Excess of Par Value | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Stockholders’ Equity |
| (In thousands) |
Balance, December 29, 2019 | $ | 111,140 |
| | $ | 90,357 |
| | $ | 2,811,973 |
| | $ | (199,646 | ) | | $ | 2,813,824 |
|
Impact of adopting ASU 2016-13 (see Note 1)
| — |
| | — |
| | (1,328 | ) | | — |
| | (1,328 | ) |
Net income | — |
| | — |
| | 33,665 |
| | — |
| | 33,665 |
|
Other comprehensive loss | — |
| | — |
| | — |
| | (78,681 | ) | | (78,681 | ) |
Dividends | — |
| | — |
| | (7,779 | ) | | — |
| | (7,779 | ) |
Exercise of employee stock options and related income tax benefits | 21 |
| | 1,085 |
| | — |
| | — |
| | 1,106 |
|
Issuance of common stock for employee stock purchase plans | 14 |
| | 1,242 |
| | — |
| | — |
| | 1,256 |
|
Purchases of common stock | (66 | ) | | (6,276 | ) | | — |
| | — |
| | (6,342 | ) |
Issuance of common stock for long-term incentive program | 197 |
| | 2,831 |
| | — |
| | — |
| | 3,028 |
|
Stock compensation | — |
| | 997 |
| | — |
| | — |
| | 997 |
|
Balance, April 5, 2020 | $ | 111,306 |
| | $ | 90,236 |
| | $ | 2,836,531 |
| | $ | (278,327 | ) | | $ | 2,759,746 |
|
|
| | | | | | | | | | | | | | | | | | | |
| For the Three-Month Period Ended March 31, 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 ASU 2016-02
| — |
| | — |
| | 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 |
|
The accompanying notes are an integral part of these consolidated financial statements.
PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) |
| | | | | | | |
| Three Months Ended |
| April 5, 2020 | | March 31, 2019 |
| (In thousands) |
Operating activities: | | | |
Net income | $ | 33,665 |
| | $ | 35,412 |
|
Loss from discontinued operations and dispositions, net of income taxes | 50 |
| | 41 |
|
Income from continuing operations | 33,715 |
| | 35,453 |
|
Adjustments to reconcile income from continuing operations to net cash provided by (used in) continuing operations: | | | |
Stock-based compensation | 3,050 |
| | 6,097 |
|
Restructuring and other costs, net | 5,858 |
| | 7,639 |
|
Depreciation and amortization | 60,758 |
| | 50,469 |
|
Loss on disposition of businesses and assets, net | — |
| | 2,133 |
|
Change in fair value of contingent consideration | (12,325 | ) | | 3,102 |
|
Amortization of deferred debt financing costs and accretion of discounts | 707 |
| | 861 |
|
Amortization of acquired inventory revaluation | 1,088 |
| | 283 |
|
Changes in assets and liabilities which provided (used) cash, excluding effects from companies acquired: | | | |
Accounts receivable, net | 80,600 |
| | 7,864 |
|
Inventories | (54,758 | ) | | (38,441 | ) |
Accounts payable | 3,164 |
| | (1,451 | ) |
Accrued expenses and other | (61,807 | ) | | (79,325 | ) |
Net cash provided by (used in) operating activities of continuing operations | 60,050 |
| | (5,316 | ) |
Net cash used in operating activities of discontinued operations | — |
| | — |
|
Net cash provided by (used in) operating activities | 60,050 |
| | (5,316 | ) |
Investing activities: | | | |
Capital expenditures | (20,488 | ) | | (19,875 | ) |
Purchases of investments | (1,638 | ) | | (519 | ) |
Purchases of licenses | — |
| | (5,000 | ) |
Proceeds from disposition of businesses and assets | 60 |
| | 550 |
|
Proceeds from surrender of life insurance policies | 52 |
| | — |
|
Activity related to acquisitions, net of cash and cash equivalents acquired | — |
| | (4,384 | ) |
Net cash used in investing activities of continuing operations | (22,014 | ) | | (29,228 | ) |
Net cash provided by investing activities of discontinued operations | — |
| | — |
|
Net cash used in investing activities | (22,014 | ) | | (29,228 | ) |
Financing activities: | | | |
Payments on borrowings | (141,000 | ) | | (152,000 | ) |
Proceeds from borrowings | 125,000 |
| | 179,000 |
|
Payments of debt financing costs | — |
| | (88 | ) |
Settlement of cash flow hedges | 8,708 |
| | (1,675 | ) |
Net payments on other credit facilities | (4,283 | ) | | (3,476 | ) |
Payments for acquisition-related contingent consideration | — |
| | (12,100 | ) |
Proceeds from issuance of common stock under stock plans | 1,106 |
| | 8,610 |
|
Purchases of common stock | (6,342 | ) | | (5,293 | ) |
Dividends paid | (7,781 | ) | | (7,743 | ) |
Net cash (used in) provided by financing activities of continuing operations | (24,592 | ) | | 5,235 |
|
Net cash provided by financing activities of discontinued operations | — |
| | — |
|
Net cash (used in) provided by financing activities | (24,592 | ) | | 5,235 |
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (10,169 | ) | | 450 |
|
Net increase (decrease) in cash, cash equivalents and restricted cash | 3,275 |
| | (28,859 | ) |
Cash, cash equivalents and restricted cash at beginning of period | 191,894 |
| | 166,315 |
|
Cash, cash equivalents and restricted cash at end of period | $ | 195,169 |
| | $ | 137,456 |
|
| | | |
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 | $ | 195,146 |
| | $ | 134,252 |
|
Restricted cash included in other current assets | 23 |
| | 3,204 |
|
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows | $ | 195,169 |
| | $ | 137,456 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
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 29, 2019, filed with the SEC (the “2019 Form 10-K”). The balance sheet amounts at December 29, 2019 in this report were derived from the Company’s audited 2019 consolidated financial statements included in the 2019 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 months ended April 5, 2020 and March 31, 2019, 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 January 3, 2021 ("fiscal year 2020") will include 53 weeks, and the fiscal year ended December 29, 2019 ("fiscal year 2019") 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 December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 eliminates certain exceptions and adds guidance to reduce complexity in accounting for income taxes. Specifically, this guidance: (1) removes the intraperiod tax allocation exception to the incremental approach; (2) removes the ownership changes in investments exception in determining when a deferred tax liability is recognized after an investor in a foreign entity transitions to or from the equity method of accounting and applies this provision on a modified retrospective basis through a cumulative-effect adjustment to retained earnings at the beginning of the period of adoption; and (3) removes the exception to using the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. ASU 2019-12 also simplifies accounting principles by making other changes, including requiring an entity to: (1) evaluate whether a step-up in tax basis of goodwill relates to a business combination or a separate transaction; (2) make a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and to apply this provision retrospectively to all periods presented; and (3) recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and apply this provision either retrospectively for all periods presented or on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The provisions of this guidance (except as specifically mentioned above) are to be applied prospectively upon their effective date. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those years. Early adoption is permitted but requires simultaneous adoption of all provisions of this guidance. 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 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 standard was effective for the Company beginning on December 30, 2019, the first day of the Company's fiscal year 2020. The Company applied the provisions of this guidance prospectively. The adoption did not have a material impact 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 adoption. The standard was effective for the Company beginning on December 30, 2019, the first day of the Company's fiscal year 2020. The Company applied the provisions of this guidance prospectively. The adoption did not have a material impact 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. The standard was effective for the Company beginning on
December 30, 2019, the first day of the Company's fiscal year 2020. The adoption did not have a material impact on the Company's disclosures related to fair value measurements.
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"). 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 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. The standards were effective for the Company beginning on December 30, 2019, the first day of the Company's fiscal year 2020. The Company adopted these standards using the modified-retrospective approach. The adoption of the standards resulted in a decrease in retained earnings at December 30, 2019 of approximately $1.3 million from the cumulative effect of initially applying the standards as of that date. In addition, the adoption of the standard resulted in an increase in reserve for doubtful accounts of $1.7 million and an increase in deferred tax assets of $0.4 million from the tax impact of the cumulative adjustments. The adoption did not have an impact on cash from or used in operating, investing or financing activities in the Company's consolidated statement of cash flows at December 30, 2019.
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 |
| April 5, 2020 | | March 31, 2019 |
| Discovery & Analytical Solutions | | Diagnostics | | Total | | Discovery & Analytical Solutions | | Diagnostics | | Total |
| (In thousands) |
Primary geographical markets | | | | | | | | | | | |
Americas | $ | 169,116 |
| | $ | 105,157 |
| | $ | 274,273 |
| | $ | 162,417 |
| | $ | 98,008 |
| | $ | 260,425 |
|
Europe | 118,657 |
| | 81,599 |
| | 200,256 |
| | 107,606 |
| | 65,858 |
| | 173,464 |
|
Asia | 110,622 |
| | 67,245 |
| | 177,867 |
| | 118,810 |
| | 96,038 |
| | 214,848 |
|
| $ | 398,395 |
| | $ | 254,001 |
| | $ | 652,396 |
| | $ | 388,833 |
| | $ | 259,904 |
| | $ | 648,737 |
|
| | | | | | | | | | | |
Primary end-markets | | | | | | | | | | | |
Diagnostics | $ | — |
| | $ | 254,001 |
| | $ | 254,001 |
| | $ | — |
| | $ | 259,904 |
| | $ | 259,904 |
|
Life sciences | 245,733 |
| | — |
| | 245,733 |
| | 217,377 |
| | — |
| | 217,377 |
|
Applied markets | 152,662 |
| | — |
| | 152,662 |
| | 171,456 |
| | — |
| | 171,456 |
|
| $ | 398,395 |
| | $ | 254,001 |
| | $ | 652,396 |
| | $ | 388,833 |
| | $ | 259,904 |
| | $ | 648,737 |
|
| | | | | | | | | | | |
Timing of revenue recognition | | | | | | | | | | | |
Products and services transferred at a point in time | $ | 267,907 |
| | $ | 231,653 |
| | $ | 499,560 |
| | $ | 275,438 |
| | $ | 239,247 |
| | $ | 514,685 |
|
Services transferred over time | 130,488 |
| | 22,348 |
| | 152,836 |
| | 113,395 |
| | 20,657 |
| | 134,052 |
|
| $ | 398,395 |
| | $ | 254,001 |
| | $ | 652,396 |
| | $ | 388,833 |
| | $ | 259,904 |
| | $ | 648,737 |
|
Contract Balances
Contract assets: The unbilled receivables (contract assets) primarily relate to the Company's right to consideration for work completed but not billed at the reporting date. The unbilled receivables are transferred to trade receivables when billed to customers. Contract assets are generally classified as current assets and are included in "Accounts receivable, net" in the consolidated balance sheets. The balance of contract assets as of April 5, 2020 and December 29, 2019 were $33.7 million and $37.0 million, respectively. The amount of unbilled receivables recognized at the beginning of the period that were transferred to trade receivables during the three months ended April 5, 2020 was $14.9 million. The increase in unbilled receivables during the three months ended April 5, 2020 as a result of recognition of revenue before billing to customers, excluding amounts transferred to trade receivables during the period, amounted to $11.6 million.
Contract liabilities: The contract liabilities primarily relate to the advance consideration received from customers for products and related installation for which transfer of control has not occurred at the balance sheet date. Contract liabilities are classified as either current in "Accounts payable" or long-term in "Long-term liabilities" in the consolidated balance sheets based on the timing of when the Company expects to recognize revenue. The balance of contract liabilities as of April 5, 2020 and December 29, 2019 were $32.1 million and $29.9 million, respectively. The increase in contract liabilities during the three months ended April 5, 2020 due to cash received, excluding amounts recognized as revenue during the period, was $14.8 million. The amount of revenue recognized during the three months ended April 5, 2020 that was included in the contract liability balance at the beginning of the period was $12.6 million.
Contract costs: The Company recognizes the incremental costs of obtaining a contract with a customer as an asset if it expects the benefit of those costs to be longer than one year. The Company determined that certain sales incentive programs meet the requirements to be capitalized. Total capitalized costs to obtain a contract were immaterial during the period and are included in other current and long-term assets on the consolidated balance sheets. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. These costs include the Company's internal sales force compensation program, as the Company determined that annual compensation is commensurate with annual sales activities.
Transaction price allocated to the remaining performance obligations
The Company applies the practical expedient in ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The estimated revenue expected to be recognized beyond one year in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the period are not material to the Company. The remaining performance obligations primarily include noncancelable purchase orders and noncancelable software subscriptions and cloud service contracts.
Note 3: Business Combinations
Acquisitions in fiscal year 2019
During the fiscal year 2019, the Company completed the acquisition of five businesses for aggregate consideration of $433.1 million in cash. The acquired businesses include Cisbio Bioassays SAS (“Cisbio”), a company based in Codolet, France, which was acquired for a total consideration of $219.9 million in cash, Shandong Meizheng Bio-Tech Co., Ltd. ("Meizheng Group"), a company headquartered in Beijing, China, for a total consideration of $166.5 million in cash, and three other businesses which were acquired for a total consideration of $46.6 million in cash. The Company has a potential obligation to pay the former shareholders of certain of these acquired businesses additional contingent consideration of up to $31.8 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. The Company has reported the operations for these acquisitions within the results of the Company's Diagnostics and Discovery & Analytical Solutions segments, as applicable, from the acquisition dates. Identifiable definite-lived intangible assets, such as core technology, trade names and customer relationships, acquired as part of these acquisitions had a weighted average amortization period of 11.0 years.
The total purchase price for the acquisitions in fiscal year 2019 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:
|
| | | | | | | | | | | |
| Cisbio | | Meizheng | | Other |
| (In thousands) |
Fair value of business combination: | | | | | |
Cash payments | $ | 219,795 |
| | $ | 145,000 |
| | $ | 45,042 |
|
Other liability | — |
| | 6,446 |
| | 638 |
|
Contingent consideration | — |
| | 12,100 |
| | 634 |
|
Working capital and other adjustments | 138 |
| | 2,961 |
| | 302 |
|
Less: cash acquired | (12,542 | ) | | (2,108 | ) | | (1,334 | ) |
Total | $ | 207,391 |
| | $ | 164,399 |
| | $ | 45,282 |
|
Identifiable assets acquired and liabilities assumed: | | | | | |
Current assets | $ | 43,554 |
| | $ | 15,160 |
| | $ | 4,042 |
|
Property, plant and equipment | 4,835 |
| | 6,278 |
| | 727 |
|
Other assets | 100 |
| | 32 |
| | 481 |
|
Identifiable intangible assets: | | | | | |
Core technology | 89,000 |
| | 36,600 |
| | 27,667 |
|
Trade names | 5,000 |
| | 4,900 |
| | 1,310 |
|
Customer relationships | 39,000 |
| | 55,800 |
| | 6,700 |
|
Goodwill | 73,061 |
| | 79,175 |
| | 17,005 |
|
Deferred taxes | (34,606 | ) | | (21,849 | ) | | (6,657 | ) |
Debt assumed | — |
| | (706 | ) | | (2,698 | ) |
Liabilities assumed | (12,553 | ) | | (10,991 | ) | | (3,295 | ) |
Total | $ | 207,391 |
| | $ | 164,399 |
| | $ | 45,282 |
|
The preliminary allocations of the purchase prices for acquisitions are based upon initial valuations. The Company's estimates and assumptions underlying the initial valuations are subject to the collection of information necessary to complete its valuations within the measurement periods, which are up to one year from the respective acquisition dates. The primary areas
of the preliminary purchase price allocations that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired and liabilities assumed, assets and liabilities related to income taxes and related valuation allowances, and residual goodwill. The Company expects to continue to obtain information to assist in determining the fair values of the net assets acquired at the acquisition dates during the measurement periods. During the measurement periods, the Company will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition dates that, if known, would have resulted in the recognition of those assets and liabilities as of those dates. These adjustments will be made in the periods in which the amounts are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition dates. All changes that do not qualify as adjustments made during the measurement periods are also included in current period earnings.
During fiscal year 2020, 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. Based on this information, the Company recognized an increase in intangible assets of $1.9 million, a decrease in goodwill of $1.6 million and a decrease in deferred tax liabilities of $0.3 million during the three months ended April 5, 2020.
Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and are subject to adjustment upon finalization of the purchase price allocations. The accounting for business combinations requires estimates and judgments as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair values for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. Contingent consideration is measured at fair value at the acquisition date, based on the probability that revenue thresholds or product development milestones will be achieved during the earnout period, with changes in the fair value after the acquisition date affecting earnings to the extent it is to be settled in cash. Increases or decreases in the fair value of contingent consideration liabilities primarily result from changes in the estimated probabilities of achieving revenue thresholds, changes in discount rates or product development milestones during the earnout period.
As of April 5, 2020, the Company may have to pay contingent consideration related to acquisitions with open contingency periods of up to $57.1 million. As of April 5, 2020, the Company has recorded contingent consideration obligations with an estimated fair value of $22.8 million, of which $20.5 million was recorded in accrued expenses and other current liabilities, and $2.3 million was recorded in long-term liabilities. As of December 29, 2019, the Company had recorded contingent consideration obligations with an estimated fair value of $35.5 million, of which $20.8 million was recorded in accrued expenses and other current liabilities, and $14.7 million was recorded in long-term liabilities. The expected maximum earnout period for acquisitions with open contingency periods does not exceed 2.8 years from April 5, 2020, and the remaining weighted average expected earnout period at April 5, 2020 was 1 year. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the condensed 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 divestiture-related costs for the three months ended April 5, 2020 and March 31, 2019 were $12.4 million and $1.8 million, respectively. These amounts included $12.3 million of incentive award associated with the Company's acquisition of Meizheng Group for the three months ended April 5, 2020 and $0.5 million of stay bonus associated with the Company's acquisition of Tulip Diagnostics Private Limited for the three months ended March 31, 2019. 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.
Note 4: Restructuring and Other Costs, Net
The Company has undertaken a series of restructuring actions related to the impact of acquisitions and divestitures, the alignment of the Company's operations with its growth strategy, the integration of its business units and its productivity initiatives. The activities associated with these plans have been reported as restructuring and other costs, net, as applicable, and are included as a component of income from continuing operations. The current portion of restructuring and other costs is recorded in short-term accrued restructuring and other costs and accrued expense and other current liabilities. The long-term portion of restructuring and other costs is recorded in long-term liabilities and operating lease liabilities.
The Company implemented a restructuring plan in the first quarter of fiscal year 2020 consisting of workforce reductions and closure of excess facilities principally intended to realign resources to emphasize growth initiatives (the "Q1 2020 Plan"). The Company implemented a restructuring plan in each quarter of fiscal year 2019 consisting of workforce reductions
principally intended to realign resources to emphasize growth initiatives (the "Q1 2019 Plan", "Q2 2019 Plan", "Q3 2019 Plan" and "Q4 2019 Plan", respectively). Details of the plans initiated in previous years (the “Previous Plans”) are discussed more fully in Note 5 to the audited consolidated financial statements in the 2019 Form 10-K.
The following table summarizes the reductions in headcount, the initial restructuring or contract termination charges by reporting segment, and the dates by which payments were substantially completed, or the dates by which payments are expected to be substantially completed, for restructuring actions implemented during fiscal years 2020 and 2019 in continuing operations:
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Workforce Reductions | | Closure of Excess Facility | | Total | | (Expected) Date Payments Substantially Completed by |
| Headcount Reduction | | Discovery & Analytical Solutions | | Diagnostics | | Discovery & Analytical Solutions | | Diagnostics | | | Severance | | Excess Facility |
| | | | | | |
| (In thousands, except headcount data) | | | | |
Q1 2020 Plan
| 32 | | $ | 2,312 |
| | $ | 1,134 |
| | $ | 92 |
| | $ | 682 |
| | $ | 4,220 |
| | Q4 FY2020 | | Q1 FY2022 |
Q4 2019 Plan
| 22 | | $ | 177 |
| | 2,404 |
| | — |
| | — |
| | 2,581 |
| | Q3 FY2020 | | — |
Q3 2019 Plan
| 259 | | $ | 11,156 |
| | 2,641 |
| | — |
| | — |
| | 13,797 |
| | Q2 FY2020 | | — |
Q2 2019 Plan
| 44 | | 4,461 |
| | 1,129 |
| | — |
| | — |
| | 5,590 |
| | Q1 FY2020 | | — |
Q1 2019 Plan
| 105 | | 6,001 |
| | 1,459 |
| | — |
| | — |
| | 7,460 |
| | Q4 FY2019 | | — |
The Company does not currently expect to incur any future charges for these plans. The Company expects to make payments under the Previous Plans for remaining residual lease obligations, with terms varying in length, through fiscal year 2022.
In connection with the termination of various contractual commitments, the Company recorded additional pre-tax charges of $0.1 million and $0.2 million during the three months ended April 5, 2020, in the Diagnostics and Discovery & Analytical Solutions segments, respectively.
The Company recorded pre-tax charges of $0.1 million and $1.3 million associated with relocating facilities during the three months ended April 5, 2020 in the Diagnostics and Discovery & Analytical Solutions segments, respectively. The Company expects to make payments on these relocation activities through fiscal year 2021.
At April 5, 2020, the Company had $15.1 million recorded for accrued restructuring and other costs, of which $11.3 million was recorded in short-term accrued restructuring and other costs, $1.7 million was recorded in long-term liabilities, and $2.1 million was recorded in operating lease liabilities. At December 29, 2019, the Company had $13.9 million recorded for accrued restructuring and other costs, of which $11.6 million was recorded in short-term accrued restructuring and other costs, $0.4 million was recorded in accrued expenses and other current liabilities, $0.8 million was recorded in long-term liabilities, and $1.1 million was recorded in operating lease liabilities. The following table summarizes the Company's restructuring accrual balances and related activity by restructuring plan, as well as other accrual balances and related activity, during the three months ended April 5, 2020:
|
| | | | | | | | | | | | | | | | | | | |
| Balance at December 29, 2019 | | 2020 Charges | | 2020 Changes in Estimates, Net | | 2020 Amounts Paid | | Balance at April 5, 2020 |
| (In thousands) |
Severance: | | | | | | | | | |
Q1 2020 Plan
| $ | — |
| | $ | 3,446 |
| | $ | — |
| | $ | (791 | ) | | $ | 2,655 |
|
Q4 2019 Plan
| 889 |
| | — |
| | — |
| | (40 | ) | | 849 |
|
Q3 2019 Plan
| 6,311 |
| | — |
| | — |
| | (1,456 | ) | | 4,855 |
|
Q2 2019 Plan
| 1,889 |
| | — |
| | — |
| | (857 | ) | | 1,032 |
|
Q1 2019 Plan
| 2,129 |
| | — |
| | — |
| | (669 | ) | | 1,460 |
|
| | | | | | | | | |
Facility: | | | | | | | | | |
Q1 2020 Plan
| — |
| | 774 |
| | — |
| | (92 | ) | | 682 |
|
| | | | | | | | | |
Previous Plans | 1,647 |
| | — |
| | — |
| | (112 | ) | | 1,535 |
|
Restructuring | 12,865 |
| | 4,220 |
|
| — |
| | (4,017 | ) | | 13,068 |
|
Contract Termination | 188 |
| | — |
| | 212 |
| | — |
| | 400 |
|
Other Costs | 827 |
| | 1,426 |
| | — |
| | (598 | ) | | 1,655 |
|
Total Restructuring and Other Liabilities | $ | 13,880 |
| | $ | 5,646 |
| | $ | 212 |
| | $ | (4,615 | ) | | $ | 15,123 |
|
Note 5: Interest and Other Expense, Net
Interest and other expense, net, consisted of the following:
|
| | | | | | | |
| Three Months Ended |
| April 5, 2020 | | March 31, 2019 |
| (In thousands) |
Interest income | $ | (265 | ) | | $ | (283 | ) |
Interest expense | 13,665 |
| | 15,850 |
|
Loss on disposition of businesses and assets, net | — |
| | 2,133 |
|
Other income, net | (3,407 | ) | | (1,135 | ) |
Total interest and other expense, net | $ | 9,993 |
| | $ | 16,565 |
|
Foreign currency transaction losses were $7.9 million and $0.1 million for the three months ended April 5, 2020 and March 31, 2019, respectively. Net (gains) losses from forward currency hedge contracts were $(9.6) million and $0.3 million for the three months ended April 5, 2020 and March 31, 2019, respectively. The other components of net periodic pension credit were $1.7 million and $1.5 million for the three months ended April 5, 2020 and March 31, 2019, respectively. These amounts were included in other income, net.
Note 6: Inventories
Inventories as of April 5, 2020 and December 29, 2019 consisted of the following:
|
| | | | | | | |
| April 5, 2020 | | December 29, 2019 |
| (In thousands) |
Raw materials | $ | 140,480 |
| | $ | 130,673 |
|
Work in progress | |