SEC Filing | PerkinElmer, Inc.

View:

Download DOC

Download PDF

Download XLS

Download XBRL

pki-20201004

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 October 4, 2020


☐			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.

Table of Contents

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 November 5, 2020, there were outstanding 111,974,485 shares of common stock, $1 par value per share.

Table of Contents

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Unaudited Financial Statements	4
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
	Overview	36
	Critical Accounting Policies and Estimates	37
	Consolidated Results of Continuing Operations	37
	Reporting Segment Results of Continuing Operations	42
	Liquidity and Capital Resources	44
	Dividends	48
	Contractual Obligations	48
	Effects of Recently Adopted and Issued Accounting Pronouncements	48

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4.	Controls and Procedures	51

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	52

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60

Item 6.	Exhibits	61

Signatures		62

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				Nine Months Ended
	October 4, 2020		September 29, 2019		October 4, 2020		September 29, 2019
	(In thousands, except per share data)
Product revenue	$	736,846	$	493,320	$	1,763,881	$	1,434,156
Service revenue	227,179		213,603		664,258		644,021
Total revenue	964,025		706,923		2,428,139		2,078,177
Cost of product revenue	299,785		236,618		746,469		681,349
Cost of service revenue	136,795		128,030		398,858		398,954
Total cost of revenue	436,580		364,648		1,145,327		1,080,303
Selling, general and administrative expenses	225,249		204,171		654,844		604,581
Research and development expenses	50,131		45,376		148,566		141,700
Restructuring and other costs, net	4,059		14,068		11,075		27,868
Operating income from continuing operations	248,006		78,660		468,327		223,725
Interest and other expense, net	14,249		15,406		35,054		51,879
Income from continuing operations before income taxes	233,757		63,254		433,273		171,846
Provision for income taxes	57,021		4,644		85,609		8,642
Income from continuing operations	176,736		58,610		347,664		163,204

Loss on disposition of discontinued operations before income taxes	—		—		—		—
Provision for income taxes on discontinued operations and dispositions	37		52		138		147
Loss from discontinued operations and dispositions	(37)		(52)		(138)		(147)
Net income	$	176,699	$	58,558	$	347,526	$	163,057
Basic earnings per share:
Income from continuing operations	$	1.58	$	0.53	$	3.12	$	1.47
Loss from discontinued operations and dispositions	(0.00)		(0.00)		(0.00)		(0.00)
Net income	$	1.58	$	0.53	$	3.12	$	1.47
Diluted earnings per share:
Income from continuing operations	$	1.57	$	0.53	$	3.11	$	1.46
Loss from discontinued operations and dispositions	(0.00)		(0.00)		(0.00)		(0.00)
Net income	$	1.57	$	0.52	$	3.10	$	1.46
Weighted average shares of common stock outstanding:
Basic	111,684		110,946		111,378		110,778
Diluted	112,292		111,559		111,935		111,460
Cash dividends declared per common share	$	0.07	$	0.07	$	0.21	$	0.21

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

Table of Contents

PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended				Nine Months Ended
	October 4, 2020		September 29, 2019		October 4, 2020		September 29, 2019
	(In thousands)
Net income	$	176,699	$	58,558	$	347,526	$	163,057
Other comprehensive income (loss):
Foreign currency translation adjustments	72,862		(62,700)		55,837		(66,954)


Unrealized gain (loss) on securities, net of tax	43		(5)		42		(22)
Other comprehensive income (loss)	72,905		(62,705)		55,879		(66,976)
Comprehensive income (loss)	$	249,604	$	(4,147)	$	403,405	$	96,081

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

Table of Contents

PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	October 4, 2020		December 29, 2019
	(In thousands, except share and per share data)
Current assets:
Cash and cash equivalents	$	258,293	$	191,877
Accounts receivable, net	797,911		725,184

Inventories	486,555		356,937
Other current assets	133,062		100,381

Total current assets	1,675,821		1,374,379
Property, plant and equipment:
At cost	762,661		701,580
Accumulated depreciation	(426,219)		(383,357)
Property, plant and equipment, net	336,442		318,223
Operating lease right-of-use assets	193,897		167,276
Intangible assets, net	1,181,754		1,283,286
Goodwill	3,161,998		3,111,227
Other assets, net	315,653		284,173

Total assets	$	6,865,565	$	6,538,564
Current liabilities:
Current portion of long-term debt	$	360,217	$	9,974
Accounts payable	258,038		235,855
Short-term accrued restructuring and other costs	10,344		11,559
Accrued expenses and other current liabilities	614,101		503,332
Current liabilities of discontinued operations	2,097		2,112
Total current liabilities	1,244,797		762,832
Long-term debt	1,492,633		2,064,041
Long-term liabilities	720,800		751,468
Operating lease liabilities	175,654		146,399

Total liabilities	3,633,884		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 111,878,000 shares and 111,140,000 shares at October 4, 2020 and December 29, 2019, respectively	111,878		111,140
Capital in excess of par value	128,820		90,357
Retained earnings	3,134,750		2,811,973
Accumulated other comprehensive loss	(143,767)		(199,646)
Total stockholders’ equity	3,231,681		2,813,824
Total liabilities and stockholders’ equity	$	6,865,565	$	6,538,564

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

Table of Contents

PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


	For the Nine-Month Period Ended October 4, 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
Net income	—		—		137,162		—		137,162
Other comprehensive income	—		—		—		61,655		61,655
Dividends	—		—		(7,803)		—		(7,803)
Exercise of employee stock options and related income tax benefits	175		8,792		—		—		8,967
Issuance of common stock for employee stock purchase plans	14		1,291		—		—		1,305
Purchases of common stock	(4)		(323)		—		—		(327)
Issuance of common stock for long-term incentive program	2		5,123		—		—		5,125
Stock compensation	8		1,625		—		—		1,633
Balance, July 5, 2020	$	111,501	$	106,744	$	2,965,890	$	(216,672)	$	2,967,463
Net income	—		—		176,699		—		176,699
Other comprehensive income	—		—		—		72,905		72,905
Dividends	—		—		(7,839)		—		(7,839)
Exercise of employee stock options and related income tax benefits	369		17,085		—		—		17,454
Issuance of common stock for employee stock purchase plans	—		26		—		—		26
Purchases of common stock	(1)		(158)		—		—		(159)
Issuance of common stock for long-term incentive program	9		4,176		—		—		4,185
Stock compensation	—		947		—		—		947
Balance, October 4, 2020	$	111,878	$	128,820	$	3,134,750	$	(143,767)	$	3,231,681

Table of Contents


	For the Nine-Month Period Ended September 29, 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
Net income	—		—		69,087		—		69,087
Other comprehensive loss	—		—		—		(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
Net income	—		—		58,558		—		58,558
Other comprehensive loss	—		—		—		(62,705)		(62,705)
Dividends	—		—		(7,760)		—		(7,760)
Exercise of employee stock options and related income tax benefits	19		990		—		—		1,009
Issuance of common stock for employee stock purchase plans	(1)		(11)		—		—		(12)
Purchases of common stock	(2)		(142)		—		—		(144)
Issuance of common stock for long-term incentive program	6		7,890		—		—		7,896
Stock compensation	—		3,088		—		—		3,088
Balance, September 29, 2019	$	111,093	$	83,996	$	2,755,165	$	(243,457)	$	2,706,797

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

Table of Contents

PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended
	October 4, 2020		September 29, 2019
	(In thousands)
Operating activities:
Net income	$	347,526	$	163,057
Loss from discontinued operations and dispositions, net of income taxes	138		147
Income from continuing operations	347,664		163,204
Adjustments to reconcile income from continuing operations to net cash provided by continuing operations:
Stock-based compensation	19,770		25,105
Restructuring and other costs, net	11,075		27,868
Depreciation and amortization	182,521		157,117
Loss on disposition of businesses and assets, net	886		2,469

Change in fair value of contingent consideration	(8,807)		4,399
Debt extinguishment costs	—		471
Amortization of deferred debt financing costs and accretion of discounts	2,559		2,778
Amortization of acquired inventory revaluation	1,757		13,258
Changes in assets and liabilities which provided (used) cash, excluding effects from companies acquired:
Accounts receivable, net	(67,695)		(22,132)

Inventories	(120,934)		(48,367)
Accounts payable	16,391		(34,043)

Accrued expenses and other	24,893		(143,869)
Net cash provided by operating activities of continuing operations	410,080		148,258
Net cash used in operating activities of discontinued operations	—		—
Net cash provided by operating activities	410,080		148,258
Investing activities:
Capital expenditures	(57,391)		(53,082)
Purchases of investments	(9,559)		(5,387)
Purchases of licenses	—		(5,000)
Proceeds from disposition of businesses and assets	2,423		550
Proceeds from surrender of life insurance policies	131		—
Activity related to acquisitions, net of cash and cash equivalents acquired	(3,702)		(252,620)
Net cash used in investing activities of continuing operations	(68,098)		(315,539)
Net cash provided by investing activities of discontinued operations	—		—
Net cash used in investing activities	(68,098)		(315,539)
Financing activities:
Payments on borrowings	(515,210)		(1,419,489)
Proceeds from borrowings	257,000		1,034,416
Proceeds from sale of senior unsecured notes	—		847,195
Payments of debt financing costs	—		(7,922)
Settlement of cash flow hedges	(2,089)		(1,587)
Net payments on other credit facilities	(8,124)		(11,166)
Payments for acquisition-related contingent consideration	(5,200)		(28,200)
Proceeds from issuance of common stock under stock plans	27,528		17,563
Purchases of common stock	(6,829)		(6,201)
Dividends paid	(23,381)		(23,282)
Net cash (used in) provided by financing activities of continuing operations	(276,305)		401,327
Net cash provided by financing activities of discontinued operations	—		—
Net cash (used in) provided by financing activities	(276,305)		401,327
Effect of exchange rate changes on cash, cash equivalents and restricted cash	832		(4,384)
Net increase in cash, cash equivalents and restricted cash	66,509		229,662
Cash, cash equivalents and restricted cash at beginning of period	191,894		166,315
Cash, cash equivalents and restricted cash at end of period	$	258,403	$	395,977

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	$	258,293	$	392,969
Restricted cash included in other current assets	110		3,008
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$	258,403	$	395,977

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

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 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 and nine months ended October 4, 2020 and September 29, 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 March 2020, the FASB issued Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). This update provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The following optional expedients for applying the requirements of certain Topics or Industry Subtopics in the FASB's Accounting Standards Codification ("ASC") are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance: (1) modifications of contracts within the scope of Topic 310, Receivables, and Topic 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; and (2) modifications of contracts within the scope of Topic 840, Leases, and Topic 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate or remeasurements of lease payments. For other Topics or Industry Subtopics in the ASC, the amendments also include a general principle that permits an entity to consider contract modification due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. When elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions within the relevant Topic or Industry Subtopic. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the provisions 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 March 2020, the FASB issued Accounting Standards Update No. 2020-03, Codification Improvements to Financial Instruments ("ASU 2020-03"). This guidance clarifies various ASC Topics related to financial instruments, including the following, among others: (1) Fair Value Option Disclosures: all entities are required to provide the fair value option disclosures in paragraphs 825-10-50-24 through 50-32 of the ASC; (2) Cross-Reference to Line-of-Credit or Revolving-Debt Arrangements Guidance in Subtopic 470-50, Modifications and Extinguishments: the amendments improve the understandability of the guidance; (3) Interaction of Topic 842 and Topic 326:the contractual term of a net investment in a lease determined in

Table of Contents

accordance with Topic 842, Leases should be the contractual term used to measure expected credit losses under Topic 326, Financial Instruments - Credit Losses; and (4) Interaction of Topic 326 and Subtopic 860-20: the amendments to Subtopic 860- 20 clarify that when an entity regains control of financial assets sold, an allowance for credit losses should be recorded in accordance with Topic 326. For Fair Value Option Disclosures and Cross-Reference to Line-of-Credit or Revolving-Debt Arrangements Guidance, the provisions are effective upon issuance of this guidance. For Interaction of Topic 842 and Topic 326 and Interaction of Topic 326 and 860-20, the effective dates and transition requirements for the amendments are the same as the effective dates and transition requirements in ASU 2016-13, as described below. In accordance with ASU 2020-03, the Company adopted the guidance as of April 5, 2020. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In January 2020, the FASB issued Accounting Standards Update No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 ("ASU 2020-01"). This guidance addresses the accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. The amendments clarify that: (a) an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method; and (b) an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option in accordance with the financial instruments guidance in Topic 825. The provisions of this guidance are to be applied prospectively upon their effective date. ASU 2020-01 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 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

Table of Contents

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

Table of Contents

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.

Table of Contents

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
	October 4, 2020						September 29, 2019
	Discovery & Analytical Solutions		Diagnostics		Total		Discovery & Analytical Solutions		Diagnostics		Total
	(In thousands)
Primary geographical markets
Americas	$	173,992	$	213,347	$	387,339	$	178,493	$	96,759	$	275,252
Europe	115,281		198,205		313,486		119,801		70,225		190,026
Asia	134,350		128,850		263,200		128,610		113,035		241,645
	$	423,623	$	540,402	$	964,025	$	426,904	$	280,019	$	706,923

Primary end-markets
Diagnostics