Item 8. Financial Statements and Supplemental Data

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Item 8. Financial Statements and Supplemental Data

TABLE OF CONTENTS

Report of Independent Registered Public Accounting Firm55
Consolidated Statements of Operations for Each of the Three Fiscal Years in the Period Ended December 28, 201456
Consolidated Statements of Comprehensive Income for Each of the Three Fiscal Years in the Period Ended December 28, 201457
Consolidated Balance Sheets as of December 28, 2014 and December 29, 201358
Consolidated Statements of Stockholders’ Equity for Each of the Three Fiscal Years in the Period Ended December 28, 201459
Consolidated Statements of Cash Flows for Each of the Three Fiscal Years in the Period Ended December 28, 201460
Notes to Consolidated Financial Statements61

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Waltham, Massachusetts

We have audited the accompanying consolidated balance sheets of PerkinElmer, Inc. and subsidiaries (the “Company”) as of December 28, 2014 and December 29, 2013, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 28, 2014. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of PerkinElmer, Inc. and subsidiaries as of December 28, 2014 and December 29, 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 28, 2014, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 28, 2014, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2015 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s / DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 24, 2015

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Fiscal Years Ended

December 28, 2014December 29, 2013December 30, 2012
(In thousands, except per share data)
Revenue
Product revenue$1,540,075$1,498,070$1,474,674
Service revenue697,144659,516630,514
Total revenue2,237,2192,157,5862,105,188
Cost of product revenue805,345783,584762,989
Cost of service revenue427,266397,860380,670
Selling, general and administrative expenses659,335581,898627,370
Research and development expenses121,141132,400131,835
Restructuring and contract termination charges, net13,39033,89225,051
Asset Impairment—15874,153
Operating income from continuing operations210,742227,794103,120
Interest and other expense, net41,13964,11047,956
Income from continuing operations before income taxes169,603163,68455,164
Provision for (benefit from) income taxes8,437(10,583)(16,125)
Income from continuing operations161,166174,26771,289
Loss from discontinued operations before income taxes(4,959)(10,352)(4,577)
(Loss) gain on disposition of discontinued operations before income taxes(260)(1,810)2,405
Benefit from income taxes on disposition of discontinued operations(1,831)(5,107)(823)
Loss from discontinued operations and dispositions(3,388)(7,055)(1,349)
Net income$157,778$167,212$69,940
Basic earnings per share:
Income from continuing operations$1.43$1.55$0.63
Loss from discontinued operations and dispositions(0.03)(0.06)(0.01)
Net income$1.40$1.49$0.61
Diluted earnings per share:
Income from continuing operations$1.42$1.54$0.62
Loss from discontinued operations and dispositions(0.03)(0.06)(0.01)
Net income$1.39$1.47$0.61

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Fiscal Years Ended

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Net income$157,778$167,212$69,940
Other comprehensive (loss) income
Foreign currency translation adjustments(52,951)8,75611,363
Unrecognized prior service costs, net of tax146(658)(82)
Reclassification adjustments for losses on derivatives included in net income, net of tax—2,8921,196
Unrealized gains on securities, net of tax14830
Other comprehensive (loss) income(52,791)10,99812,507
Comprehensive income$104,987$178,210$82,447

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

CONSOLIDATED BALANCE SHEETS

As of the Fiscal Years Ended

December 28, 2014December 29, 2013
(In thousands, except share and per share data)
Current assets:
Cash and cash equivalents$174,821$173,242
Accounts receivable, net470,563466,749
Inventories285,457260,858
Other current assets137,710140,342
Current assets of discontinued operations—3,647
Total current assets1,068,5511,044,838
Property, plant and equipment, net176,194183,188
Marketable securities and investments1,5681,319
Intangible assets, net490,265460,430
Goodwill2,284,0772,143,120
Other assets, net113,420111,633
Long-term assets of discontinued operations—2,184
Total assets$4,134,075$3,946,712
Current liabilities:
Current portion of long-term debt$1,075$2,624
Accounts payable173,953166,881
Accrued restructuring and contract termination charges17,12426,374
Accrued expenses and other current liabilities403,021403,678
Current liabilities of discontinued operations2,1373,239
Total current liabilities597,310602,796
Long-term debt1,051,892932,104
Long-term liabilities442,771417,325
Total liabilities2,091,9731,952,225
Commitments and contingencies (see Notes 13 and 16)
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 112,481,000 and 112,626,000 shares at December 28, 2014 and December 29, 2013, respectively112,481112,626
Capital in excess of par value94,276119,906
Retained earnings1,810,5451,684,364
Accumulated other comprehensive income24,80077,591
Total stockholders’ equity2,042,1021,994,487
Total liabilities and stockholders’ equity$4,134,075$3,946,712

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Fiscal Years Ended December 28, 2014

Common Stock AmountCapital in Excess of Par ValueRetained EarningsAccumulated Other Comprehensive IncomeTotal Stockholders’ Equity
(In thousands)
Balance, January 1, 2012$113,157$164,290$1,510,683$54,086$1,842,216
Net income——69,940—69,940
Other comprehensive income———12,50712,507
Dividends——(32,050)—(32,050)
Exercise of employee stock options and related income tax benefits1,61132,395——34,006
Issuance of common stock for employee benefit plans541,269——1,323
Purchases of common stock(82)(2,022)——(2,104)
Issuance of common stock for long-term incentive program2968,659——8,955
Stock compensation—5,019——5,019
Balance, December 30, 2012$115,036$209,610$1,548,573$66,593$1,939,812
Net income——167,212—167,212
Other comprehensive income———10,99810,998
Dividends——(31,421)—(31,421)
Exercise of employee stock options and related income tax benefits94718,895——19,842
Issuance of common stock for employee benefit plans902,642——2,732
Purchases of common stock(3,728)(123,670)——(127,398)
Issuance of common stock for long-term incentive program2817,976——8,257
Stock compensation—4,453——4,453
Balance, December 29, 2013$112,626$119,906$1,684,364$77,591$1,994,487
Net income——157,778—157,778
Other comprehensive income———(52,791)(52,791)
Dividends——(31,597)—(31,597)
Exercise of employee stock options and related income tax benefits1,02423,431——24,455
Issuance of common stock for employee benefit plans612,478——2,539
Purchases of common stock(1,448)(64,081)——(65,529)
Issuance of common stock for long-term incentive program2187,662——7,880
Stock compensation—4,880——4,880
Balance, December 28, 2014$112,481$94,276$1,810,545$24,800$2,042,102

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Fiscal Years Ended

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Operating activities:
Net income$157,778$167,212$69,940
Less: loss from discontinued operations and dispositions, net of income taxes3,3887,0551,349
Income from continuing operations161,166174,26771,289
Adjustments to reconcile income from continuing operations to net cash provided by continuing operations:
Restructuring and contract termination charges, net13,39033,89225,051
Depreciation and amortization116,736126,879125,126
Stock-based compensation14,46414,05320,625
Pension and other postretirement expense (income)77,669(18,176)35,336
Deferred taxes(33,351)(29,907)(65,551)
Contingencies and non-cash tax matters(7,605)(34,455)1,382
Amortization of deferred debt issuance costs, interest rate hedges and accretion of discounts1,4346,5023,517
Losses (gains) on dispositions, net108(1,566)—
Amortization of acquired inventory revaluation2,4252035,214
Asset Impairment—15874,153
Changes in assets and liabilities which (used) provided cash, excluding effects from companies acquired and divested:
Accounts receivable, net(16,989)(14,071)(44,878)
Inventories(24,642)(14,171)(7,860)
Accounts payable8,103(1,083)(8,083)
Excess tax benefit from exercise of common stock options——1,767
Accrued expenses and other(30,640)(85,277)(83,102)
Net cash provided by operating activities of continuing operations282,268157,248153,986
Net cash (used in) provided by operating activities of discontinued operations(671)1,343(1,816)
Net cash provided by operating activities281,597158,591152,170
Investing activities:
Capital expenditures(29,072)(38,981)(42,401)
Proceeds from dispositions of property, plant and equipment, net2,53152,202—
Changes in restricted cash balances——487
Proceeds from surrender of life insurance policies490783—
Activity related to acquisitions and investments, net of cash and cash equivalents acquired(271,477)(15,699)(40,858)
Net cash used in investing activities of continuing operations(297,528)(1,695)(82,772)
Net cash provided by investing activities of discontinued operations1,6314842,463
Net cash used in investing activities(295,897)(1,211)(80,309)
Financing activities:
Payments on revolving credit facility(356,000)(538,000)(435,850)
Proceeds from revolving credit facility475,000677,000395,000
Prepayment of long-term debt—(150,000)—
Premium on prepayment of long-term debt—(11,119)—
Payments of debt financing costs(1,845)—(416)
Net (payments on) proceeds from other credit facilities(12,675)5,2815,274
Settlement of cash flow hedges—1,3634,050
Payments for acquisition-related contingent consideration(855)—(12,459)
Excess tax benefit from exercise of common stock——1,767
Proceeds from issuance of common stock under stock plans24,45520,31332,478
Purchases of common stock(65,529)(127,398)(2,104)
Dividends paid(31,620)(31,600)(31,903)
Net cash provided by (used in) financing activities30,931(154,160)(44,163)
Effect of exchange rate changes on cash and cash equivalents(15,052)(1,422)1,404
Net increase in cash and cash equivalents1,5791,79829,102
Cash and cash equivalents at beginning of year173,242171,444142,342
Cash and cash equivalents at end of year$174,821$173,242$171,444
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest$30,320$39,904$40,447
Income taxes$40,638$36,675$53,281

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1:Nature of Operations and Accounting Policies

Nature of Operations: PerkinElmer, Inc. is a leading provider of products, services and solutions to the diagnostics, research, environmental, industrial and laboratory services markets. Through its advanced technologies, solutions and services, critical issues are addressed that help to improve the health and safety of people and their environment. The results are reported within two reporting segments: Human Health and Environmental Health.

The consolidated financial statements include the accounts of PerkinElmer, Inc. and its subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated in consolidation.

The Company has two operating segments; Human Health and Environmental Health. The Company’s Human Health segment concentrates on developing diagnostics, tools and applications to help detect diseases earlier and more accurately and to accelerate the discovery and development of critical new therapies. Within the Human Health segment, the Company serves both the diagnostics and research markets. The Company’s Environmental Health segment provides products, services and solutions to facilitate the creation of safer food and consumer products, more secure surroundings and efficient energy resources. The Environmental Health segment serves the environmental, industrial and laboratory services markets.

The Company’s fiscal year ends on the Sunday nearest December 31. The Company reports fiscal years under a 52/53 week format. Under this method, certain years will contain 53 weeks. Each of the fiscal years ended December 28, 2014, December 29, 2013 and December 30, 2012 included 52 weeks. The fiscal year ending January 3, 2016 will include 53 weeks. The extra week in fiscal year 2015 will be included in the third quarter.

The Company has evaluated subsequent events from December 28, 2014 through the date of the issuance of these consolidated financial statements and has determined that no material subsequent events have occurred that would affect the information presented in these consolidated financial statements.

Accounting Policies and Estimates: The preparation of consolidated financial statements in accordance with United States (“U.S.”) Generally Accepted Accounting Principles (“GAAP”) requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Revenue Recognition: The Company’s product revenue is recorded when persuasive evidence of an arrangement exists, delivery has occurred, the price to the buyer is fixed or determinable, and collectability is reasonably assured. For products that include installation, and if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, and installation revenue is recognized when the installation is complete. For revenue that includes customer-specified acceptance criteria, revenue is recognized after the acceptance criteria have been met. Certain of the Company’s products require specialized installation. Revenue for these products is deferred until installation is completed. Revenue from services is deferred and recognized over the contractual period, or as services are rendered.

In limited circumstances, the Company has arrangements that include multiple elements that are delivered at different points of time, such as revenue from products and services with a remaining service or storage component, including cord blood processing and storage. For these arrangements, the revenue is allocated to each of the deliverables based upon their relative selling prices as determined by a selling-price hierarchy. A deliverable in an arrangement qualifies as a separate unit of accounting if the delivered item has value to the customer on a stand-alone basis. A delivered item that does not qualify as a separate unit of accounting is combined with the other undelivered items in the arrangement and revenue is recognized for those combined deliverables as a single unit of accounting. The selling price used for each deliverable is based upon vendor-specific objective evidence ("VSOE") if such evidence is available, third-party evidence ("TPE") if VSOE is not available, and management's best estimate of selling price ("BESP") if neither VSOE nor TPE are available. TPE is the price of the Company's or any competitor's largely interchangeable products or services in stand-alone sales to similarly-situated customers. BESP is the price at which the Company would sell the deliverable if it were sold regularly on a stand-alone basis, considering market conditions and entity-specific factors.

Revenue from software licenses and services was 5% of the Company's total revenue for fiscal year 2014, 5% of the Company's total revenue for fiscal year 2013, and 3% of the Company's total revenue for fiscal year 2012. The Company sells its software licenses with maintenance services and, in some cases, also with consulting services. For the undelivered elements, the Company determines VSOE of fair value to be the price charged when the undelivered element is sold separately. The

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company determines VSOE for maintenance sold in connection with a software license based on the amount that will be separately charged for the maintenance renewal period. The Company determines VSOE for consulting services by reference to the amount charged for similar engagements when a software license sale is not involved.

The Company recognizes revenue from software licenses sold together with maintenance and/or consulting services upon shipment using the residual method, provided that the above criteria have been met. If VSOE of fair value for the undelivered elements cannot be established, the Company defers all revenue from the arrangement until the earlier of the point at which such sufficient VSOE does exist or all elements of the arrangement have been delivered, or if the only undelivered element is maintenance, then the Company recognizes the entire fee ratably over the maintenance period.

The Company recognizes revenue from the grant of certain intellectual property rights for patented technologies it owns. These rights typically include a combination of the following: the grant of a non-exclusive, retroactive and future license to patented technologies, a covenant-not-to-sue, the release of the licensee from certain claims, and the dismissal of any pending litigation. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined timeframe. For these arrangements, the revenue is allocated to each of the deliverables based upon their relative selling prices as determined by the selling-price hierarchy. In the case where the agreement includes the dismissal of any pending litigation, the Company allocates between revenue and litigation settlement using the residual method. The Company recognizes revenue when the earnings process is complete and upon the execution of the agreement, when collectability is reasonably assured, or upon receipt of the minimum upfront fee for term agreement renewals, and when all other revenue recognition criteria have been met.

Service revenues represent the Company’s service offerings including service contracts, field service including related time and materials, diagnostic testing, cord blood processing and storage, and training. Service revenues are recognized as the service is performed. Revenues for service contracts and storage contracts are recognized over the contract period.

The Company sells products and accessories predominantly through its direct sales force. As a result, the use of distributors is generally limited to geographic regions where the Company has no direct sales force. The Company does not offer product return or exchange rights (other than those relating to defective goods under warranty) or price protection allowances to its customers, including its distributors. Payment terms granted to distributors are the same as those granted to end-user customers and payments are not dependent upon the distributors’ receipt of payment from their end-user customers. Sales incentives related to distributor revenue are also the same as those for end-user customers.

Warranty Costs: The Company provides for estimated warranty costs for products at the time of their sale. Warranty liabilities are estimated using expected future repair costs based on historical labor and material costs incurred during the warranty period.

Shipping and Handling Costs: The Company reports shipping and handling revenue in revenue, to the extent they are billed to customers, and the associated costs in cost of product revenue.

Inventories: Inventories, which include material, labor and manufacturing overhead, are valued at the lower of cost or market. Inventories are accounted for using the first-in, first-out method of determining inventory costs. Inventory quantities on-hand are regularly reviewed, and where necessary, provisions for excess and obsolete inventory are recorded based primarily on the Company’s estimated forecast of product demand and production requirements.

Income Taxes: The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. This method also requires the recognition of future tax benefits such as net operating loss carryforwards, to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. A valuation allowance is established for any deferred tax asset for which realization is not more likely than not. With respect to earnings expected to be indefinitely reinvested offshore, the Company does not accrue tax for the repatriation of such foreign earnings.

The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions and other issues. These reserves are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present related to the tax benefit. Potential interest and penalties associated with such uncertain tax positions is recorded as a component of income tax expense. See Note 6, below, for additional details.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property, Plant and Equipment: The Company depreciates plant and equipment using the straight-line method over its estimated useful lives, which generally fall within the following ranges: buildings- 10 to 40 years; leasehold improvements-estimated useful life or remaining term of lease, whichever is shorter; and machinery and equipment- 3 to 7 years. Certain tooling costs are capitalized and amortized over a 3-year life, while repairs and maintenance costs are expensed.

Asset Retirement Obligations: The Company records obligations associated with its lease obligations, the retirement of tangible long-lived assets and the associated asset-retirement costs in accordance with authoritative guidance on asset retirement obligations. The Company reviews legal obligations associated with the retirement of long-lived assets that result from contractual obligations or the acquisition, construction, development and/or normal use of the assets. If it is determined that a legal obligation exists, regardless of whether the obligation is conditional on a future event, the fair value of the liability for an asset retirement obligation is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset, and this additional carrying amount is depreciated over the life of the asset. The difference between the gross expected future cash flow and its present value is accreted over the life of the related lease as interest expense. The amounts recorded in the consolidated financial statements are not material to any year presented.

Pension and Other Postretirement Benefits: The Company sponsors both funded and unfunded U.S. and non-U.S. defined benefit pension plans and other postretirement benefits. The Company immediately recognizes actuarial gains and losses in operating results in the year in which the gains and losses occur. Actuarial gains and losses are measured annually as of fiscal year end and accordingly will be recorded in the fourth quarter, unless the Company is required to perform an interim remeasurement. The remaining components of pension expense, primarily service and interest costs and assumed return on plan assets, are recorded on a quarterly basis. The Company’s funding policy provides that payments to the U.S. pension trusts shall at least be equal to the minimum funding requirements of the Employee Retirement Income Security Act of 1974. Non-U.S. plans are accrued for, but generally not fully funded, and benefits are paid from operating funds.

Translation of Foreign Currencies: For foreign operations, asset and liability accounts are translated at current exchange rates; income and expenses are translated using weighted average exchange rates for the reporting period. Resulting translation adjustments, as well as translation gains and losses from certain intercompany transactions considered permanent in nature, are reported in accumulated other comprehensive income, a separate component of stockholders’ equity. Gains and losses arising from transactions and translation of period-end balances denominated in currencies other than the functional currency are included in other expense, net, and were not material for fiscal years 2014, 2013, and 2012.

Business Combinations: Business combinations are accounted for at fair value. Acquisition costs are expensed as incurred and recorded in selling, general and administrative expenses; previously held equity interests are valued at fair value upon the acquisition of a controlling interest; in-process research and development (“IPR&D”) is recorded at fair value as an intangible asset at the acquisition date; restructuring costs associated with a business combination are expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date affect income tax expense. All changes that do not qualify as measurement period adjustments are included in current period earnings. The accounting for business combinations requires estimates and judgment as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair value for assets acquired and liabilities assumed. 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. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of finite-lived intangible assets, or the recognition of additional consideration which would be expensed.

Goodwill and Other Intangible Assets: The Company’s intangible assets consist of (i) goodwill, which is not being amortized; (ii) indefinite lived intangibles, which consist of certain trademarks and trade names that are not subject to amortization; and (iii) amortizing intangibles, which consist of patents, trade names and trademarks, licenses, customer relationships, and purchased technologies, which are being amortized over their estimated useful lives.

The process of testing goodwill for impairment involves the determination of the fair value of the applicable reporting units. The test consists of a two-step process. The first step is the comparison of the fair value to the carrying value of the reporting unit to determine if the carrying value exceeds the fair value. The second step measures the amount of an impairment loss, and is only performed if the carrying value exceeds the fair value of the reporting unit. This annual impairment assessment is performed by the Company on the later of January 1 or the first day of each fiscal year. This same impairment test will be performed at other times during the course of the year, should an event occur which suggests that the recoverability of goodwill should be reconsidered. Non-amortizing intangibles are also subject to an annual impairment test. The impairment test consists of a comparison of the fair value of the non-amortizing intangible asset with its carrying amount. If the carrying amount of a

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

non-amortizing intangible asset exceeds its fair value, an impairment loss in an amount equal to that excess is recognized. In addition, the Company evaluates the remaining useful life of its non-amortizing intangible assets at least annually to determine whether events or circumstances continue to support an indefinite useful life. If events or circumstances indicate that the useful lives of non-amortizing intangible assets are no longer indefinite, the assets will be tested for impairment. These intangible assets will then be amortized prospectively over their estimated remaining useful life and accounted for in the same manner as other intangible assets that are subject to amortization. Recoverability of amortizing intangible assets is assessed only when events have occurred that may give rise to impairment. When a potential impairment has been identified, forecasted undiscounted net cash flows of the operations to which the asset relates are compared to the current carrying value of the long-lived assets present in that operation. If such cash flows are less than such carrying amounts, long-lived assets, including such intangibles, are written down to their respective fair values. See Note 12, below, for additional details.

Stock-Based Compensation: The Company accounts for stock-based compensation expense based on estimated grant date fair value, generally using the Black-Scholes option-pricing model. The fair value is recognized, net of estimated forfeitures, as expense in the consolidated financial statements over the requisite service period. The determination of fair value and the timing of expense using option pricing models such as the Black-Scholes model require the input of highly subjective assumptions, including the expected forfeiture rate, life of the option and the expected price volatility of the underlying stock. The Company estimates the expected forfeiture and expected life assumptions based on historical experience. In determining the Company’s expected stock price volatility assumption, the Company reviews both the historical and implied volatility of the Company’s common stock, with implied volatility based on the implied volatility of publicly traded options on the Company’s common stock. The Company has one stock-based compensation plan from which it makes grants, which is described more fully in Note 18, below.

Marketable Securities and Investments: The cost of securities sold is based on the specific identification method. If securities are classified as available for sale, the Company records these investments at their fair values with unrealized gains and losses included in accumulated other comprehensive income. Under the cost method of accounting, equity investments in private companies are carried at cost and are adjusted for other-than-temporary declines in fair value, additional investments or distributions.

Cash and Cash Equivalents: The Company considers all highly liquid unrestricted instruments with a purchased maturity of three months or less to be cash equivalents. The carrying amount of cash equivalents approximates fair value due to the short maturities of these instruments.

Environmental Matters: The Company accrues for costs associated with the remediation of environmental pollution when it is probable that a liability has been incurred and the Company’s proportionate share of the amount can be reasonably estimated. The recorded liabilities have not been discounted.

Research and Development: Research and development costs are expensed as incurred. The fair value of acquired in-process research and development ("IPR&D") costs are recorded at fair value as an intangible asset at the acquisition date and amortized once the product is ready for sale or expensed if abandoned.

Restructuring Charges: In recent fiscal years, the Company has undertaken a series of restructuring actions related to the impact of acquisitions and divestitures, the alignment of its operations with its growth strategy, the integration of its business units and productivity initiatives. In connection with these initiatives, the Company has recorded restructuring charges, as more fully described in Note 4, below. Generally, costs associated with an exit or disposal activity are recognized when the liability is incurred. Prior to recording restructuring charges for employee separation agreements, the Company notifies all employees of termination. Costs related to employee separation arrangements requiring future service beyond a specified minimum retention period are recognized over the service period. Costs related to lease terminations are recorded at the fair value of the liability based on the remaining lease rental payments, reduced by estimated sublease rentals that could be reasonably obtained for the property, at the date the Company ceases use.

Comprehensive Income: In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, requiring the presentation of reclassifications out of accumulated other comprehensive income on the face of the financial statements or as a separate disclosure in the notes to the financial statements. The reclassifications out of accumulated other comprehensive income and into net income were not material for the fiscal years ending December 28, 2014, December 29, 2013 and December 30, 2012. See Note 19 for additional details.

Comprehensive income is defined as net income or loss and other changes in stockholders’ equity from transactions and other events from sources other than stockholders. Comprehensive income is reflected in the consolidated statements of comprehensive income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Derivative Instruments and Hedging: Derivatives are recorded on the consolidated balance sheets at fair value. Accounting for gains or losses resulting from changes in the values of those derivatives depends on the use of the derivative instrument and whether it qualifies for hedge accounting.

For a cash flow hedge, the effective portion of the derivative’s gain or loss is initially reported as a component of other comprehensive income and subsequently amortized into net earnings when the hedged exposure affects net earnings. Cash flow hedges related to anticipated transactions are designated and documented at the inception of each hedge by matching the terms of the contract to the underlying transaction. The Company classifies the cash flows from hedging transactions in the same categories as the cash flows from the respective hedged items. Once established, cash flow hedges are generally recorded in other comprehensive income, unless an anticipated transaction is no longer likely to occur, and subsequently amortized into net earnings when the hedged exposure affects net earnings. Discontinued or dedesignated cash flow hedges are immediately settled with counterparties, and the related accumulated derivative gains or losses are recognized into net earnings on the consolidated financial statements. Settled cash flow hedges related to forecasted transactions that remain probable are recorded as a component of other comprehensive income and are subsequently amortized into net earnings when the hedged exposure affects net earnings. Forward contract effectiveness for cash flow hedges is calculated by comparing the fair value of the contract to the change in value of the anticipated transaction using forward rates on a monthly basis. As of December 28, 2014, the Company had five outstanding cash flow hedges with a Euro denominated notional amount of €238.2 million. As of December 29, 2013, the Company had no outstanding cash flow hedges. As of December 30, 2012, the Company had two outstanding cash flow hedges with Euro denominated notional amounts of €50.0 million. The Company also has entered into other foreign currency forward contracts that are not designated as hedging instruments for accounting purposes. These contracts are recorded at fair value, with the changes in fair value recognized into net earnings on the consolidated financial statements.

Recently Issued Accounting Pronouncements: From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board and are adopted by the Company as of the specified effective dates. Unless otherwise discussed, such pronouncements did not have or will not have a significant impact on the Company’s consolidated financial position, results of operations and cash flows or do not apply to the Company’s operations.

In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under this new guidance, only disposals of components of an entity that represent strategic shifts that have, or will have, a major effect on an entity's operations and financial results will be presented as discontinued operations. The standard also requires new disclosures related to individually significant disposals that do not meet the definition of a discontinued operation. The provisions of this guidance are effective for interim and annual periods beginning after December 15, 2014. The Company will utilize this new guidance when reporting new discontinued operations or disclosing new disposals in its future filings.

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. Under this new guidance, an entity should use a five-step process to recognize revenue, which depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires new disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The provisions of this guidance are effective for interim and annual periods beginning after December 15, 2016. The Company is 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.

Note 2:Business Combinations

Acquisitions in fiscal year 2014

Acquisition of Perten Instruments Group AB. In December 2014, the Company acquired all of the outstanding stock of Perten Instruments Group AB ("Perten"). Perten is a provider of analytical instruments and services for quality control of food, grain, flour and feed. The Company expects this acquisition to enhance its industrial, environmental and safety business by expanding the Company's product offerings to the academic and industrial end markets. The Company paid the shareholders of Perten $269.9 million in cash for the stock of Perten. The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired, and has been allocated to goodwill, none of which is tax deductible. The Company has reported the operations for this acquisition within the results of the Company’s Environmental Health segment from the acquisition date. Identifiable definite-lived intangible assets, such as core technology, customer relationships and trade names, acquired as part of this acquisition had weighted average amortization periods of approximately 5 to 10 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other acquisitions in fiscal year 2014. In addition to the Perten acquisition, the Company completed the acquisition of two businesses in fiscal year 2014 for total consideration of $18.0 million in cash and $4.3 million of assumed debt. The excess of the purchase price over the fair value of each 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 workforce acquired, and has been allocated to goodwill, none of which is tax deductible. The Company reported the operations for these acquisitions within the results of the Human Health and Environmental Health segments from the acquisition dates.

The total purchase price for the acquisitions in fiscal year 2014 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:

PertenOther
(Preliminary)
(In thousands)
Fair value of business combination:
Cash payments$269,937$17,898
Working capital and other adjustments—151
Less: cash acquired(16,732)(124)
Total$253,205$17,925
Identifiable assets acquired and liabilities assumed:
Current assets$32,805$1,965
Property, plant and equipment1,485125
Other assets—364
Identifiable intangible assets:
Core technology16,0001,705
Trade names7,000—
Customer relationships87,0006,800
IPR&D—1,266
Goodwill164,16415,981
Deferred taxes(31,454)(3,072)
Deferred revenue—(589)
Liabilities assumed(16,195)(2,333)
Debt assumed(7,600)(4,287)
Total$253,205$17,925

Acquisitions in fiscal year 2013

During fiscal year 2013, the Company completed the acquisition of four businesses for total consideration of $11.4 million, in cash. As of the closing dates, the Company potentially had to pay additional contingent consideration for the four acquired businesses of up to $2.2 million, which at closing had an estimated fair value of $1.1 million. During fiscal year 2014, the Company paid $0.4 million in additional deferred consideration for one of these acquisitions. The excess of the purchase price over the fair value of each 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 workforce acquired, and has been allocated to goodwill, none of which is tax deductible. The Company reported the operations for these acquisitions within the results of the Human Health and Environmental Health segments from the acquisition dates.

Acquisition in fiscal year 2012

Acquisition of Shanghai Haoyuan Biotech Co., Ltd. In November 2012, the Company acquired all outstanding stock of Shanghai Haoyuan Biotech Co., Ltd. ("Haoyuan"). Haoyuan is a provider of nucleic acid-based blood screening solutions for the blood banking and clinical diagnostics markets. The Company expects this acquisition to extend the Company's capabilities into nucleic acid blood screening, as well as deepen its position in the growing molecular clinical diagnostics market in China. The Company paid the shareholders of Haoyuan $38.0 million in cash for the stock of Haoyuan. The Company recorded a receivable of $2.7 million from the shareholders of Haoyuan as a reduction of purchase price for the settlement of certain contingencies. This receivable was collected in fiscal year 2013. As of the closing date, the Company potentially had to pay the shareholders additional contingent consideration of up to $30.0 million, which at closing had an estimated fair value of $1.9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

million. The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired, and has been allocated to goodwill, none of which is tax deductible. The Company reported the operations for this acquisition within the results of the Company’s Human Health segment from the acquisition date. Identifiable definite-lived intangible assets, such as core technology and trade names, acquired as part of this acquisition had weighted average amortization periods of 8 years.

The total purchase price has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:

Haoyuan
(In thousands)
Fair value of business combination:
Cash payments$38,000
Contingent consideration1,900
Working capital and other adjustments(2,729)
Less: cash acquired(175)
Total$36,996
Identifiable assets acquired and liabilities assumed:
Current assets$2,389
Property, plant and equipment2,906
Identifiable intangible assets:
Core technology17,700
Trade names400
IPR&D300
Goodwill19,682
Deferred taxes(2,656)
Liabilities assumed(3,725)
Total$36,996

The Company does not consider the acquisitions completed during fiscal years 2014, 2013, and 2012 to be material to its consolidated results of operations; therefore, the Company is not presenting pro forma financial information of operations. The Company has also determined that the presentation of the results of operations for each of those acquisitions, from the date of acquisition, is impracticable due to the integration of the operations upon acquisition.

As of December 28, 2014 the allocation of purchase prices for acquisitions completed in fiscal years 2013 and 2012 were final. The preliminary allocations of the purchase prices for acquisitions completed in fiscal year 2014 were 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. Adjustments to the preliminary allocation of the purchase prices during the measurement period require the revision of comparative prior period financial information when reissued in subsequent financial statements. The effect of adjustments to the allocation of the purchase prices made during the measurement periods would be as if the adjustments had been completed on the acquisition dates. The effects of any such adjustments, if material, may cause changes in depreciation, amortization, or other income or expense recognized in prior periods. All changes that do not qualify as adjustments made during the measurement periods are included in current period earnings.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. Contingent consideration is measured at fair value at the acquisition date, based on the probability that revenue thresholds or product development milestones will be achieved during the earnout period, with changes in the fair value after the acquisition date affecting earnings to the extent it is to be settled in cash. Increases or decreases in the fair value of contingent consideration liabilities primarily result from changes in the estimated probabilities of achieving revenue thresholds or product development milestones during the earnout period. The Company may have to pay contingent consideration, related to all acquisitions with open contingency periods, of up to $31.4 million as of December 28, 2014. As of December 28, 2014, the Company has recorded contingent consideration obligations relating to its acquisition of Tetra Teknolojik Sistemler Limited Sirketi with an estimated fair value of $0.1 million. The earnout period for each of these acquisitions does not exceed three years from the respective acquisition date. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the consolidated financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of definite-lived intangible assets, or the recognition of additional consideration which would be expensed.

In connection with the purchase price allocations for acquisitions, the Company estimates the fair value of deferred revenue assumed with its acquisitions. The estimated fair value of deferred revenue is determined by the legal performance obligation at the date of acquisition, and is generally based on the nature of the activities to be performed and the related costs to be incurred after the acquisition date. The fair value of an assumed liability related to deferred revenue is estimated based on the current market cost of fulfilling the obligation, plus a normal profit margin thereon. The estimated costs to fulfill the deferred revenue are based on the historical direct costs related to providing the services. The Company does not include any costs associated with selling effort, research and development, or the related fulfillment margins on these costs. In most acquisitions, profit associated with selling effort is excluded because the acquired businesses would have concluded the selling effort on the support contracts prior to the acquisition date. The estimated research and development costs are not included in the fair value determination, as these costs are not deemed to represent a legal obligation at the time of acquisition. The sum of the costs and operating income approximates, in theory, the amount that the Company would be required to pay a third-party to assume the obligation.

Total transaction costs related to acquisition activities for fiscal years 2014, 2013, and 2012 were $3.1 million, $0.1 million and $1.2 million, respectively. These transaction costs were expensed as incurred and recorded in selling, general and administrative expenses in the Company's consolidated statements of operations.

Note 3:Discontinued Operations

As part of the Company’s continuing efforts to focus on higher growth opportunities, the Company has discontinued certain businesses. The Company has accounted for these businesses as discontinued operations and, accordingly, has presented the results of operations and related cash flows as discontinued operations for all periods presented. Any remaining assets and liabilities of these businesses have been presented separately, and are reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of December 28, 2014 and December 29, 2013.

The Company recorded the following pre-tax gains and losses, which have been reported as a net gain or loss on disposition of discontinued operations during the three fiscal years ended:

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Loss on disposition of microarray-based diagnostic testing laboratory$(90)$—$—
(Loss) gain on disposition of Photoflash business(14)4932,459
Loss on disposition of Technical Services business(156)(2,100)—
Loss on disposition of other discontinued operations—(203)(54)
Net (loss) gain on disposition of discontinued operations before income taxes$(260)$(1,810)$2,405

In May 2014, the Company’s management approved the shutdown of its microarray-based diagnostic testing laboratory in the United States, which had been reported within the Human Health segment. The Company determined that, with the lack of adequate reimbursement from health care payers, the microarray-based diagnostic testing laboratory in the United States would need significant investment in its operations to reduce costs in order to effectively compete in the market. The shutdown of the microarray-based diagnostic testing laboratory in the United States resulted in a $0.1 million net pre-tax loss primarily related to the disposal of fixed assets, which was partially offset by the sale of a building in fiscal year 2014.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In June 2010, the Company sold its Photoflash business, which was included in the Company's Environmental Health segment. The Company recognized a pre-tax loss of $0.01 million in fiscal year 2014, a pre-tax gain of $0.5 million in fiscal year 2013 and a pre-tax gain of $2.5 million in fiscal year 2012 for contingent consideration related to this sale. These gains and losses were recognized as a (loss) gain on disposition of discontinued operations.

In August 1999, the Company sold the assets of its Technical Service business. During fiscal years 2014 and 2013, the Company recorded pre-tax losses of $0.2 million and $2.1 million, respectively, for a contingency related to this business. These losses were recognized as a (loss) gain on disposition of discontinued operations.

During fiscal years 2014, 2013, and 2012, the Company settled various commitments related to the divestiture of other discontinued operations. The Company recognized net pre-tax losses during fiscal years 2013 and 2012. These losses were recognized as a (loss) gain on disposition of discontinued operations.

Summary pre-tax operating results of the discontinued operations for the periods prior to disposition, which included a $1.0 million pre-tax restructuring charge related to workforce reductions in the microarray-based diagnostic testing laboratory in the United States during fiscal year 2014, were as follows during the three fiscal years ended:

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Revenue$348$8,646$10,017
Costs and expenses5,30718,99814,594
Loss from discontinued operations before income taxes$(4,959)$(10,352)$(4,577)

The Company recorded a tax benefit of $1.8 million on discontinued operations in fiscal year 2014, a tax benefit of $5.1 million on discontinued operations in fiscal year 2013 and a tax benefit of $0.8 million on discontinued operations in fiscal year 2012.

Note 4: Restructuring and Contract Termination Charges, Net

The Company's management has approved a series of restructuring actions related to the impact of acquisitions and divestitures, the alignment of its operations with the Company's growth strategy, the integration of its business units and productivity initiatives. The current portion of restructuring and contract termination charges is recorded in accrued restructuring and contract termination charges and the long-term portion of restructuring and contract termination charges is recorded in long-term liabilities. The activities associated with these plans have been reported as restructuring and contract termination charges, net, and are included as a component of operating expenses from continuing operations.

The Company implemented a restructuring plan in the third quarter of fiscal year 2014 consisting of workforce reductions principally intended to realign resources to emphasize growth initiatives (the "Q3 2014 Plan"). The Company implemented restructuring plans in the second and first quarters of fiscal year 2014, the first quarter of fiscal year 2013, and the fourth quarter of fiscal year 2012 consisting of workforce reductions principally intended to focus resources on higher growth end markets (the "Q2 2014 Plan", "Q1 2014 Plan", "Q1 2013 Plan" and "Q4 2012 Plan", respectively). The Company implemented restructuring plans in the fourth and third quarters of fiscal year 2013 consisting of workforce reductions and the closure of excess facility space principally intended to shift certain of the Company's research and development resources into a newly opened Center for Innovation (the "Q4 2013 Plan" and "Q3 2013 Plan", respectively). The Company implemented restructuring plans in the second quarter of fiscal year 2013, and the third, second and first quarters of fiscal year 2012 consisting of workforce reductions and the closure of excess facility space principally intended to shift certain of the Company's operations into a newly established shared service center, as well as realign operations, research and development resources, and production resources as a result of previous acquisitions (the "Q2 2013 Plan", "Q3 2012 Plan", "Q2 2012 Plan" and "Q1 2012 Plan", respectively). All other previous restructuring plans were workforce reductions or the closure of excess facility space principally intended to integrate the Company's businesses in order to realign operations, reduce costs, achieve operational efficiencies and shift resources into geographic regions and end markets that are more consistent with the Company's growth strategy (the "Previous Plans"). The Company also has terminated various contractual commitments in connection with certain disposal activities and has recorded charges, to the extent applicable, for the costs of terminating these contracts before the end of their terms and the costs that will continue to be incurred for the remaining terms without economic benefit to the Company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the number of employees reduced, the initial restructuring and contract termination charges by operating segment, and the expected dates payments will be substantially completed for restructuring actions during fiscal years 2014, 2013, and 2012. The Company expects to make payments for the leases of the Previous Plans, of which the terms vary in length, through fiscal year 2022.

Workforce ReductionsClosure of Excess Facility or Contract Termination ChargesTotal(Expected) Date Payments Substantially Completed by
Headcount ReductionHuman HealthEnvironmental HealthHuman HealthEnvironmental HealthSeveranceExcess Facility or Contract Termination
(In thousands, except headcount data)
Q3 2014 Plan152$6,863$6,188$—$—$13,051Q3 FY2015—
Q2 2014 Plan22460275——735Q2 FY2015—
Q1 2014 Plan17370197——567Q4 FY2014—
2014 Contract Termination ChargesN/AN/AN/A—1,5451,545N/AQ4 FY2015
Q4 2013 Plan739023,0067,271—11,179Q4 FY2014Q1 FY2019
Q3 2013 Plan29394—138—532Q1 FY2014Q4 FY2013
Q2 2013 Plan(1)2649,3958,7375225018,704Q4 FY2014Q3 FY2014
Q1 2013 Plan622,340245——2,585Q3 FY2013—
2013 Contract Termination ChargesN/AN/AN/A—696696N/AQ4 FY2015
Q4 2012 Plan545232,413——2,936Q1 FY2014—
Q3 2012 Plan(2)613,6713,728——7,399Q3 FY2014—
Q2 2012 Plan(3)2033,976242——4,218Q3 FY2014—
Q1 2012 Plan(4)1125,25238879—5,719Q1 FY2013Q2 FY2012
2012 Contract Termination ChargesN/AN/AN/A$—$1,470$1,470N/AQ4 FY2015
(1)Subsequent to the initial charge, during fiscal year 2013, the Company recorded an additional $0.6 million pre-tax restructuring charge in the Human Health segment for the Q2 2013 Plan for services that were provided for one-time termination benefits in which the employee was required to render service beyond the legal notification period.
(2)Local law required some severance for the Q3 2012 Plan to be paid in monthly installments through the fourth quarter of fiscal year 2014.
(3)Subsequent to the initial charge, during fiscal years 2013 and 2012, the Company recorded an additional $2.1 million and $3.2 million , respectively, pre-tax restructuring charges in the Human Health segment for the Q2 2012 Plan for services that were provided for one-time termination benefits in which the employee was required to render service beyond the legal notification period.
(4)Subsequent to the initial charge, during fiscal year 2012, the Company recorded an additional $0.7 million pre-tax restructuring charge primarily in the Environmental Health segment for the Q1 2012 Plan for services that were provided for one-time termination benefits in which the employee was required to render service beyond the legal notification period.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At December 28, 2014, the Company had $23.8 million recorded for accrued restructuring and contract termination charges, of which $17.1 million was recorded in short-term accrued restructuring and $6.7 million was recorded in long-term liabilities. At December 29, 2013, the Company had $35.5 million recorded for accrued restructuring and contract termination charges, of which $26.4 million was recorded in short-accrued restructuring and $9.1 million was recorded in long-term liabilities. The following table summarizes the Company's restructuring and contract termination accrual balances and related activity by restructuring plan, as well as contract termination, during fiscal years 2014, 2013, and 2012:

Balance at January 1, 20122012 Charges and Changes in Estimates, Net2012 Amounts PaidBalance at December 30, 20122013 Charges and Changes in Estimates, Net2013 Amounts PaidBalance at December 29, 20132014 Charges and Changes in Estimates, Net2014 Amounts PaidBalance at December 28, 2014
(In thousands)
Severance:
Q3 2014 Plan$—$—$—$—$—$—$—$13,051$(2,992)$10,059
Q2 2014 Plan———————735(484)251
Q1 2014 Plan———————567(475)92
Q4 2013 Plan(1)————3,908(1,921)1,987(121)(1,541)325
Q3 2013 Plan————394(257)137—(137)—
Q2 2013 Plan(2)————18,704(5,954)12,750(796)(10,373)1,581
Q1 2013 Plan(3)————2,585(2,377)208(208)——
Facility:
Q4 2013 Plan(1)————7,271(417)6,8541,055(2,106)5,803
Q3 2013 Plan————138(138)————
Q2 2013 Plan(2)————572(572)—184(184)—
Previous Plans(4)20,81923,581(17,249)27,151(376)(13,476)13,299(2,622)(5,262)5,415
Restructuring20,81923,581(17,249)27,15133,196(25,112)35,23511,845(23,554)23,526
Contract Termination2,0671,470(2,941)596696(992)3001,545(1,541)304
Total Restructuring and Contract Termination$22,886$25,051$(20,190)$27,747$33,892$(26,104)$35,535$13,390$(25,095)$23,830
(1)During fiscal year 2014, the Company recorded a pre-tax restructuring reversal of $0.1 million in the Environmental Health segment related to lower than expected costs associated with the remaining severance payments for the Q4 2013 Plan and recorded an additional pre-tax restructuring charge of $1.1 million in the Human Health segment related to higher than expected costs associated with the closure of the excess facility for the Q4 2013 Plan.
(2)During fiscal year 2014, the Company recorded pre-tax restructuring reversals of $0.3 million in the Human Health segment and $0.5 million in the Environmental Health segment related to lower than expected costs associated with the remaining severance payments for the Q2 2013 Plan. In addition during fiscal year 2014, the Company incurred an additional pre-tax restructuring charge of $0.1 million in each of the Human Health and Environmental Health segments related to higher than expected costs associated with the closure of the excess facility space for the Q2 2013 Plan.
(3)During fiscal year 2014, the Company recorded a pre-tax restructuring reversal of $0.2 million in the Human Health segment related to lower than expected costs associated with the remaining severance payments for the Q1 2013 Plan.
(4)During fiscal year 2014, the Company recognized pre-tax restructuring reversals of $1.6 million in the Human Health segment and $1.1 million in the Environmental Health segment related to lower than expected costs associated with workforce reductions for the previous restructuring plans. During fiscal year 2014, the Company recognized an additional pre-tax restructuring charge of $0.1 million in the Human Health segment related to higher than expected costs associated with the closure of the excess facility space for the previous restructuring plans.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 5:Interest and Other Expense, Net

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

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Interest income$(667)$(650)$(747)
Interest expense36,27049,92445,787
Other expense, net5,53614,8362,916
Total interest and other expense, net$41,139$64,110$47,956

In December 2013, the Company redeemed all of its 6% senior unsecured notes due in 2015 (the “2015 Notes”) for a redemption price that included the outstanding principal amount of $150.0 million and a prepayment premium of $11.1 million, which is included in other expense, net. The transaction also resulted in the write-off of $2.8 million for the remaining unamortized derivative losses for previously settled cash flow hedges and the write-off of $0.2 million for the remaining deferred debt issuance costs. Both of these amounts are included in interest expense.

Note 6:Income Taxes

The Company regularly reviews its tax positions in each significant taxing jurisdiction in the process of evaluating its unrecognized tax benefits. The Company makes adjustments to its unrecognized tax benefits when: (i) facts and circumstances regarding a tax position change, causing a change in management’s judgment regarding that tax position; (ii) a tax position is effectively settled with a tax authority at a differing amount; and/or (iii) the statute of limitations expires regarding a tax position.

The tabular reconciliation of the total amounts of unrecognized tax benefits is as follows for the fiscal years ended:

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Unrecognized tax benefits, beginning of year$39,410$58,110$51,740
Gross increases—tax positions in prior periods—32510,653
Gross decreases—tax positions in prior periods(1,809)(10,539)(4,665)
Gross increases—current-period tax positions2392,2223,343
Settlements(1,400)(3,643)(2,822)
Lapse of statute of limitations(4,129)(6,495)(595)
Foreign currency translation adjustments31(570)456
Unrecognized tax benefits, end of year$32,342$39,410$58,110

The Company classifies interest and penalties as a component of income tax expense. At December 28, 2014, the Company had accrued interest and penalties of $3.4 million and $0.2 million, respectively. During fiscal year 2014, the Company recognized a net benefit of $0.7 million for interest and a benefit of $0.2 million for penalties in its total tax provision primarily due to settlements and statutes that had lapsed. During fiscal year 2013, the Company recognized a benefit of $3.9 million for interest and a benefit of $3.7 million for penalties in its total tax provision primarily due to settlements and statutes that had lapsed. During fiscal year 2012, the Company recognized a charge of $1.1 million for interest and a benefit of $2.2 million for penalties in its total tax provision. At December 28, 2014, the Company had gross tax effected unrecognized tax benefits of $32.3 million, of which $28.5 million, if recognized, would affect the continuing operations effective tax rate. The remaining amount, if recognized, would affect discontinued operations.

The Company believes that it is reasonably possible that approximately $5.3 million of its uncertain tax positions at December 28, 2014, including accrued interest and penalties, and net of tax benefits, may be resolved over the next twelve months as a result of lapses in applicable statutes of limitations and potential settlements. Various tax years after 2007 remain open to examination by certain jurisdictions in which the Company has significant business operations, such as China, Finland, Germany, Italy, Netherlands, Singapore, the United Kingdom and the United States. The tax years under examination vary by jurisdiction.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During fiscal years 2014, 2013, and 2012, the Company recorded net discrete income tax benefits of $7.0 million, $24.0 million and $7.0 million, respectively, primarily for reversals of uncertain tax position reserves and resolution of other tax matters.

The components of income (loss) from continuing operations before income taxes were as follows for the fiscal years ended:

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
U.S.$(37,758)$(71,901)$(113,969)
Non-U.S.207,361235,585169,133
Total$169,603$163,684$55,164

On a U.S. income tax basis, the Company has reported significant taxable income over the three year period ended December 28, 2014. The Company has utilized tax attributes to minimize cash taxes paid on that taxable income.

The components of the provision for (benefit from) income taxes for continuing operations were as follows:

Current Expense (Benefit)Deferred Expense (Benefit)Total
(In thousands)
Fiscal year ended December 28, 2014
Federal$(262)$(19,169)$(19,431)
State2,416(3,842)(1,426)
Non-U.S.39,634(10,340)29,294
Total$41,788$(33,351)$8,437
Fiscal year ended December 29, 2013
Federal$2,331$(29,961)$(27,630)
State1,968(2,147)(179)
Non-U.S.15,0252,20117,226
Total$19,324$(29,907)$(10,583)
Fiscal year ended December 30, 2012
Federal$(3,640)$(34,920)$(38,560)
State2,752(2,794)(42)
Non-U.S.50,314(27,837)22,477
Total$49,426$(65,551)$(16,125)

The total provision for (benefit from) income taxes included in the consolidated financial statements is as follows for the fiscal years ended:

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Continuing operations$8,437$(10,583)$(16,125)
Discontinued operations(1,831)(5,107)(823)
Total$6,606$(15,690)$(16,948)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A reconciliation of income tax expense at the U.S. federal statutory income tax rate to the recorded tax provision is as follows for the fiscal years ended:

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Tax at statutory rate$59,361$57,289$19,302
Non-U.S. rate differential, net(36,616)(36,377)(26,652)
U.S. taxation of multinational operations2,3673,6581,727
State income taxes, net1,970(1,762)3,400
Prior year tax matters(7,009)(23,534)3,389
Federal tax credits(3,399)(5,452)(1,657)
Change in valuation allowance(7,679)(4,675)(14,446)
Other, net(558)270(1,188)
Total$8,437$(10,583)$(16,125)

The Company’s provision for (benefit from) income taxes for fiscal years 2014, 2013, and 2012 included $7.1 million, $7.4 million and $5.2 million, respectively, of benefits derived from tax holidays in China and Singapore. The tax holidays in China and Singapore are scheduled to expire in fiscal years 2017 and 2018, respectively.

The tax effects of temporary differences and attributes that gave rise to deferred income tax assets and liabilities as of December 28, 2014 and December 29, 2013 were as follows:

December 28, 2014December 29, 2013
(In thousands)
Deferred tax assets:
Inventory$9,041$9,850
Reserves and accruals30,64130,269
Accrued compensation22,91515,920
Net operating loss and credit carryforwards106,020132,710
Accrued pension44,34223,353
Restructuring reserve7,5226,853
Deferred revenue46,41342,687
All other, net8241,666
Total deferred tax assets267,718263,308
Deferred tax liabilities:
Postretirement health benefits(4,472)(3,894)
Depreciation and amortization(176,043)(163,269)
Total deferred tax liabilities(180,515)(167,163)
Valuation allowance(55,460)(63,139)
Net deferred tax assets$31,743$33,006

At December 28, 2014, the Company had state net operating loss carryforwards of $197.4 million, foreign net operating loss carryforwards of $160.5 million, state tax credit carryforwards of $11.9 million, general business tax credit carryforwards of $30.8 million, and foreign tax credit carryforwards of $12.4 million. These are subject to expiration in years ranging from 2015 to 2033, and without expiration for certain foreign net operating loss carryforwards and certain state credit carryforwards. At December 28, 2014, the Company also had U.S. federal net operating loss carryforwards of $45.8 million as a result of acquisitions. The Company acquired estimated utilizable U.S. federal loss carryforwards of $223.4 million as a result of the Caliper acquisition during fiscal year 2011, of which $25.8 million remain at December 28, 2014. The utilization of these losses and credits is subject to annual limitations based on Section 382 of the Internal Revenue Code of 1986, as amended. These federal losses and credits will expire in fiscal years 2015 through 2031.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Valuation allowances take into consideration limitations imposed upon the use of the tax attributes and reduce the value of such items to the likely net realizable amount. The Company regularly evaluates positive and negative evidence available to determine if valuation allowances are required or if existing valuation allowances are no longer required. Valuation allowances have been provided on state net operating loss and state tax credit carryforwards and on certain foreign tax attributes that the Company has determined are not more likely than not to be realized. The decrease in the valuation allowance in fiscal years 2014 and 2013 is primarily due to the anticipated utilization of attributes in certain foreign and state jurisdictions. The valuation allowance at December 30, 2012 and January 1, 2012 was $67.8 million and $82.3 million, respectively, and the change in the valuation allowance during fiscal year 2012 was primarily due to the reversal of valuation allowances for two of the Company’s non-U.S. subsidiaries when it became more likely than not that the subsidiaries’ deferred tax assets would be realized.

Current deferred tax assets of $62.0 million and $78.3 million were included in other current assets at December 28, 2014 and December 29, 2013, respectively. Long-term deferred tax liabilities of $30.3 million and $45.3 million were included in other long-term liabilities at December 28, 2014 and December 29, 2013, respectively.

The components of net deferred tax assets (liabilities) as of December 28, 2014 and December 29, 2013 were as follows:

December 28, 2014December 29, 2013
(In thousands)
U.S.$44,073$22,565
Non-U.S.(12,330)10,441
Total$31,743$33,006

Taxes have not been provided on unremitted earnings of international subsidiaries that the Company considers indefinitely reinvested because the Company plans to keep these amounts indefinitely reinvested overseas except for instances where the Company can remit such earnings to the U.S. without an associated net tax cost. The Company's indefinite reinvestment determination is based on the future operational and capital requirements of its U.S. and non-U.S. operations. As of December 28, 2014, the amount of foreign earnings that the Company has the intent and ability to keep invested outside the U.S. indefinitely and for which no U.S. tax cost has been provided was approximately $675.0 million. It is not practical to calculate the unrecognized deferred tax liability on those earnings.

Note 7:Earnings Per Share

Basic earnings per share was computed by dividing net income by the weighted-average number of common shares outstanding during the period less restricted unvested shares. Diluted earnings per share was computed by dividing net income by the weighted-average number of common shares outstanding plus all potentially dilutive common stock equivalents, primarily shares issuable upon the exercise of stock options using the treasury stock method. The following table reconciles the number of shares utilized in the earnings per share calculations for the fiscal years ended:

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Number of common shares—basic112,593112,254113,728
Effect of dilutive securities:
Stock options922982847
Restricted stock awards224267285
Number of common shares—diluted113,739113,503114,860
Number of potentially dilutive securities excluded from calculation due to antidilutive impact4754851,288

Antidilutive securities include outstanding stock options with exercise prices and average unrecognized compensation cost in excess of the average fair market value of common stock for the related period. Antidilutive options were excluded from the calculation of diluted net income per share and could become dilutive in the future.

Note 8:Accounts Receivable, Net

Accounts receivable were net of reserves for doubtful accounts of $32.9 million and $28.3 million as of December 28, 2014 and December 29, 2013, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 9:Inventories

Inventories as of December 28, 2014 and December 29, 2013 consisted of the following:

December 28, 2014December 29, 2013
(In thousands)
Raw materials$96,169$92,713
Work in progress18,78315,505
Finished goods170,505152,640
Total inventories$285,457$260,858
Note 10:Property, Plant and Equipment, Net

Property, plant and equipment, at cost, as of December 28, 2014 and December 29, 2013, consisted of the following:

December 28, 2014December 29, 2013
(In thousands)
Land$906$1,019
Building and leasehold improvements175,040171,393
Machinery and equipment316,868325,699
Total property, plant and equipment492,814498,111
Accumulated depreciation(316,620)(314,923)
Total property, plant and equipment, net$176,194$183,188

Depreciation expense on property, plant and equipment for the fiscal years ended December 28, 2014, December 29, 2013 and December 30, 2012 was $33.3 million, $37.6 million and $35.0 million, respectively.

Note 11:Marketable Securities and Investments

Investments as of December 28, 2014 and December 29, 2013 consisted of the following:

December 28, 2014December 29, 2013
(In thousands)
Marketable securities$1,568$1,319

Marketable securities include equity and fixed-income securities held to meet obligations associated with the Company’s supplemental executive retirement plan and other deferred compensation plans. The Company has, accordingly, classified these securities as long-term.

The net unrealized holding gain and loss on marketable securities, net of deferred income taxes, reported as a component of other comprehensive income in stockholders’ equity, was a $0.01 million gain in both fiscal years 2014 and 2013. The proceeds from the sales of securities and the related gains and losses are not material for any period presented.

Marketable securities classified as available for sale as of December 28, 2014 and December 29, 2013 consisted of the following:

MarketGross Unrealized Holding
ValueCostGains(Losses)
(In thousands)
December 28, 2014
Equity securities$1,002$1,110$7$(115)
Fixed-income securities8888——
Other478541—(63)
$1,568$1,739$7$(178)
December 29, 2013
Equity securities$740$871$—$(131)
Fixed-income securities308308——
Other271334—(63)
$1,319$1,513$—$(194)
Note 12:Goodwill and Intangible Assets, Net

The Company tests goodwill and non-amortizing intangible assets at least annually for possible impairment. Accordingly, the Company completes the annual testing of impairment for goodwill and non-amortizing intangible assets on the later of January 1 or the first day of each fiscal year. In addition to its annual test, the Company regularly evaluates whether events or circumstances have occurred that may indicate a potential impairment of goodwill or non-amortizing intangible assets.

The process of testing goodwill for impairment involves the determination of the fair value of the applicable reporting units. The test consists of a two-step process. The first step is the comparison of the fair value to the carrying value of the reporting unit to determine if the carrying value exceeds the fair value. The second step measures the amount of an impairment loss, and is only performed if the carrying value exceeds the fair value of the reporting unit. The Company performed its annual impairment testing for its reporting units as of January 1, 2014, its annual impairment date for fiscal year 2014. The Company concluded based on the first step of the process that there was no goodwill impairment, and the fair value exceeded the carrying value by more than 90.0% for each reporting unit, with the exception of the life sciences and technology reporting unit where the fair value exceeded the carrying value by approximately 11.0%. The carrying value of the goodwill for the life sciences and technology reporting unit was $796.3 million, at the annual impairment date for fiscal year 2014. The long-term terminal growth rates for the Company’s reporting units were 3.0% to 6.0% for the fiscal year 2014 impairment analysis. The range for the discount rates for the reporting units was 10.0% to 11.5%. Keeping all other variables constant, a 10.0% change in any one of the input assumptions for the various reporting units would still allow the Company to conclude, based on the first step of the process, that there was no impairment of goodwill.

During the second quarter of fiscal year 2014, the Company realigned its organization which resulted in a change in the composition of the Company's reporting units within the Human Health segment. The Company's informatics business was moved from the life sciences and technology reporting unit to its own reporting unit. As a result of the new alignment, the Company reallocated goodwill based on the relative fair value, determined using the income approach, of each of these businesses. During the third quarter of 2014, the Company finalized this analysis and the realignment resulted in $220.3 million of goodwill being reallocated from the life sciences and technology reporting unit to the informatics reporting unit. The Company concluded based on the first step of the process that there was no goodwill impairment for either the life sciences and technology reporting unit or the informatics reporting unit as the fair value exceeded the carrying value for each of these reporting units as of the date of the realignment.

The Company has consistently employed the income approach to estimate the current fair value when testing for impairment of goodwill. A number of significant assumptions and estimates are involved in the application of the income approach to forecast operating cash flows, including markets and market share, sales volumes and prices, costs to produce, tax rates, capital spending, discount rates and working capital changes. Cash flow forecasts are based on approved business unit operating plans for the early years’ cash flows and historical relationships in later years. The income approach is sensitive to changes in long-term terminal growth rates and the discount rates. The long-term terminal growth rates are consistent with the Company’s historical long-term terminal growth rates, as the current economic trends are not expected to affect the long-term terminal growth rates of the Company. The Company corroborates the income approach with a market approach.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company has consistently employed the relief from royalty model to estimate the current fair value when testing for impairment of non-amortizing intangible assets. The impairment test consists of a comparison of the fair value of the non-amortizing intangible asset with its carrying amount. If the carrying amount of a non-amortizing intangible asset exceeds its fair value, an impairment loss in an amount equal to that excess is recognized. In addition, the Company evaluates the remaining useful lives of its non-amortizing intangible assets at least annually to determine whether events or circumstances continue to support an indefinite useful life. If events or circumstances indicate that the useful lives of non-amortizing intangible assets are no longer indefinite, the assets will be tested for impairment. These intangible assets will then be amortized prospectively over their estimated remaining useful lives and accounted for in the same manner as other intangible assets that are subject to amortization. The Company performed its annual impairment testing as of January 1, 2014, and concluded that there was no impairment of non-amortizing intangible assets.

As part of integrating the Company's acquisitions, in the fourth quarter of fiscal year 2012, the Company decided that prospectively it would primarily focus on the PerkinElmer trade name. Accordingly, the Company undertook a review of certain of its trade names within its portfolio as part of a realignment of its marketing strategy. The process resulted in the Company determining that the lives of certain trade names that it intends to phase out should be shortened, and in certain cases non-amortizing trade names were determined to no longer be indefinite-lived. Accordingly, the Company tested the recoverability of these identified indefinite-lived and definite-lived intangibles and concluded that the fair values of certain trade name intangible assets were less than the carrying amounts of those assets. For non-amortizing trade names the Company compared the fair values, which was determined using a relief from royalty method, to the carrying values, considering the revised useful lives. For amortizing trade names, the Company first determined if the undiscounted cash flows associated with the intangibles exceeded the carrying values. If the undiscounted cash flows did not exceed the carrying values, the Company determined the fair values of the trade names using a relief from royalty method, considering the revised useful lives. As a result, the remaining adjusted fair values of $6.1 million for trade names are being amortized over the period of time until the trade names are expected to be phased out, having weighted average remaining useful lives of 3 years.

Additionally during fiscal year 2012, the Company recorded an intangible asset impairment charge of $74.2 million which was equal to the excess of the carrying amounts of the intangible assets over the fair value of such assets. The Company recognized $73.4 million pre-tax impairment charges in the Human Health segment and also recognized $0.7 million pre-tax impairment charges in the Environmental Health segment.

An assessment of the recoverability of amortizing intangible assets takes place when events have occurred that may give rise to an impairment. During fiscal year 2013, the Company recorded a charge of $0.2 million for the impairment of certain long-lived assets within the Human Health segment, as the carrying amounts of the long-lived assets were not recoverable and exceeded their fair value. These non-cash impairments of long-lived assets, including intangible assets, have been recorded as a separate component of operating expenses.

The changes in the carrying amount of goodwill for fiscal years 2014 and 2013 are as follows:

Human HealthEnvironmental HealthConsolidated
(In thousands)
Balance at December 30, 2012$1,632,487$490,301$2,122,788
Foreign currency translation12,8672,30015,167
Acquisitions, earnouts and other2,9782,1875,165
Balance at December 29, 20131,648,332494,7882,143,120
Foreign currency translation(29,145)(8,741)(37,886)
Acquisitions, earnouts and other2,408176,435178,843
Balance at December 28, 2014$1,621,595$662,482$2,284,077

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Identifiable intangible asset balances at December 28, 2014 by category and by business segment were as follows:

Human HealthEnvironmental HealthConsolidated
(In thousands)
Patents$36,760$3,193$39,953
Less: Accumulated amortization(24,652)(2,548)(27,200)
Net patents12,10864512,753
Trade names and trademarks33,0697,00040,069
Less: Accumulated amortization(16,878)(58)(16,936)
Net trade names and trademarks16,1916,94223,133
Licenses59,631—59,631
Less: Accumulated amortization(41,792)—(41,792)
Net licenses17,839—17,839
Core technology169,864128,627298,491
Less: Accumulated amortization(98,798)(85,899)(184,697)
Net core technology71,06642,728113,794
Customer relationships292,627109,558402,185
Less: Accumulated amortization(148,820)(8,174)(156,994)
Net customer relationships143,807101,384245,191
IPR&D5,0795,02410,103
Less: Accumulated amortization(998)(2,134)(3,132)
Net IPR&D4,0812,8906,971
Net amortizable intangible assets265,092154,589419,681
Non-amortizable intangible assets:
Trade names and trademarks—70,58470,584
Total$265,092$225,173$490,265

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Identifiable intangible asset balances at December 29, 2013 by category and business segment were as follows:

Human HealthEnvironmental HealthConsolidated
(In thousands)
Patents$36,791$2,800$39,591
Less: Accumulated amortization(22,205)(2,002)(24,207)
Net patents14,58679815,384
Trade names and trademarks35,7238635,809
Less: Accumulated amortization(16,122)(86)(16,208)
Net trade names and trademarks19,601—19,601
Licenses71,5807,60079,180
Less: Accumulated amortization(45,835)(7,095)(52,930)
Net licenses25,74550526,250
Core technology187,387114,683302,070
Less: Accumulated amortization(88,811)(80,515)(169,326)
Net core technology98,57634,168132,744
Customer relationships305,03816,357321,395
Less: Accumulated amortization(127,397)(5,436)(132,833)
Net customer relationships177,64110,921188,562
IPR&D4,2575,2269,483
Less: Accumulated amortization(695)(1,483)(2,178)
Net IPR&D3,5623,7437,305
Net amortizable intangible assets339,71150,135389,846
Non-amortizable intangible assets:
Trade names and trademarks—70,58470,584
Total$339,711$120,719$460,430

Total amortization expense related to definite-lived intangible assets was $83.4 million in fiscal year 2014, $89.3 million in fiscal year 2013 and $90.1 million in fiscal year 2012. Estimated amortization expense related to definite-lived intangible assets for each of the next five years is $80.4 million in fiscal year 2015, $71.4 million in fiscal year 2016, $61.9 million in fiscal year 2017, $48.7 million in fiscal year 2018, and $37.2 million in fiscal year 2019.

The Company entered into a strategic agreement in fiscal year 2012 under which it acquired certain intangible assets and received a license to certain core technology for an analytics and data discovery platform, as well as the exclusive right to distribute the platform in certain scientific research and development markets. During fiscal year 2012, the Company paid $6.8 million for net intangible assets and $25.0 million for prepaid royalties. During fiscal year 2013, the Company extended the existing agreement for an additional year. In addition, the Company entered into a new agreement to expand the distribution rights to the clinical and other related markets and acquired additional intangible assets. During fiscal year 2013, the Company paid $7.0 million for net intangible assets and $40.3 million for prepaid royalties. The prepaid royalties have been recorded primarily as other long-term assets. The Company expects to pay $10.0 million of additional prepaid royalties within the next twelve months. The Company expenses royalties as revenue is recognized. These intangible assets are being amortized over their estimated useful lives. The Company has reported the amortization of these intangible assets within the results of the Company's Human Health segment from the execution date.

Note 13:Debt

Senior Unsecured Revolving Credit Facility. On January 8, 2014, the Company refinanced its debt held under a previous senior unsecured revolving credit facility and entered into a new senior unsecured revolving credit facility. The new senior unsecured revolving credit facility provides for $700.0 million of revolving loans and has an initial maturity of January 8, 2019. As of December 28, 2014, undrawn letters of credit in the aggregate amount of $12.2 million were treated as issued and outstanding under the new senior unsecured revolving credit facility. As of December 28, 2014, the Company had $171.8 million available for additional borrowing under the new facility. The Company uses the new senior unsecured revolving credit facility for general corporate purposes, which may include working capital, refinancing existing indebtedness, capital expenditures, share repurchases, acquisitions and strategic alliances. The interest rates under the new senior unsecured

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

revolving credit facility are based on the Eurocurrency rate or the base rate at the time of borrowing, plus a margin. The base rate is the higher of (i) the rate of interest in effect for such day as publicly announced from time to time by JP Morgan Chase Bank, N.A. as its "prime rate," (ii) the Federal Funds rate plus 50 basis points or (iii) one-month Libor plus 1.00%. At December 28, 2014, borrowings under the new senior unsecured revolving credit facility were accruing interest primarily based on the Eurocurrency rate. The Eurocurrency margin as of December 28, 2014 was 108 basis points. The weighted average Eurocurrency interest rate as of December 28, 2014 was 0.18%, resulting in a weighted average effective Eurocurrency rate, including the margin, of 1.26%. At December 28, 2014, the Company had $516.0 million of borrowings in U.S. dollars outstanding under the new senior unsecured revolving credit facility. The credit agreement for the facility contains affirmative, negative and financial covenants and events of default similar to those contained in the Company's credit agreement for its previous facility. The financial covenants in the Company's new senior unsecured revolving credit facility include a debt-to-capital ratio, and two contingent covenants, a maximum consolidated leverage ratio and a minimum consolidated interest coverage ratio, applicable if the Company's credit rating is downgraded below investment grade. During fiscal year 2014, the Company capitalized $1.8 million of debt financing costs for the refinancing of debt held under its previous senior unsecured revolving credit facility. These debt financing costs are being amortized into interest and other expense, net, on a straight-line basis, over the term of the new senior unsecured revolving credit facility.

The Company's previous senior unsecured revolving credit facility provided for $700.0 million of revolving loans and had an initial maturity of December 16, 2016. At December 29, 2013, the Company had $397.0 million of borrowings in U.S. dollars outstanding under the previous senior unsecured revolving credit facility. The credit agreement for the previous facility contained affirmative, negative and financial covenants and events of default similar to those contained in the Company's new credit facility.

5% Senior Unsecured Notes due in 2021. On October 25, 2011, the Company issued $500.0 million aggregate principal amount of senior unsecured notes due in 2021 in a registered public offering and received $496.9 million of net proceeds from the issuance. The 2021 Notes were issued at 99.372% of the principal amount, which resulted in a discount of $3.1 million. As of December 28, 2014, the 2021 Notes had an aggregate carrying value of $497.7 million, net of $2.3 million of unamortized original issue discount. As of December 29, 2013, the 2021 Notes had an aggregate carrying value of $497.4 million, net of $2.6 million of unamortized original issue discount. The 2021 Notes mature in November 2021 and bear interest at an annual rate of 5%. Interest on the 2021 Notes is payable semi-annually on May 15th and November 15th each year. Prior to August 15, 2021 (three months prior to their maturity date), the Company may redeem the 2021 Notes in whole or in part, at its option, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2021 Notes to be redeemed, plus accrued and unpaid interest, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest in respect to the 2021 Notes being redeemed, discounted on a semi-annual basis, at the Treasury Rate plus 45 basis points, plus accrued and unpaid interest. At any time on or after August 15, 2021 (three months prior to their maturity date), the Company may redeem the 2021 Notes, at its option, at a redemption price equal to 100% of the principal amount of the 2021 Notes to be redeemed plus accrued and unpaid interest. Upon a change of control (as defined in the indenture governing the 2021 Notes ) and a contemporaneous downgrade of the 2021 Notes below investment grade, each holder of 2021 Notes will have the right to require the Company to repurchase such holder's 2021 Notes for 101% of their principal amount, plus accrued and unpaid interest.

Financing Lease Obligations. In fiscal year 2012, the Company entered into agreements with the lessors of certain buildings that the Company is currently occupying and leasing to expand those buildings. The Company provided a portion of the funds needed for the construction of the additions to the buildings, and as a result the Company is considered the owner of the buildings during the construction period. At the end of the construction period, the Company was not reimbursed by the lessors for all of the construction costs. The Company is therefore deemed to have continuing involvement and the leases qualify as financing leases under sale-leaseback accounting guidance, representing debt obligations for the Company and non-cash investing and financing activities. As a result, the Company capitalized $29.3 million in property and equipment, net, representing the fair value of the buildings with a corresponding increase to debt. The Company has also capitalized $11.5 million in additional construction costs necessary to complete the renovations to the buildings, which were funded by the lessors, with a corresponding increase to debt. At December 28, 2014, the Company had $39.3 million recorded for these financing lease obligations, of which $1.1 million was recorded as short-term debt and $38.2 million was recorded as long-term debt. At December 29, 2013, the Company had $40.3 million recorded for these financing lease obligations, of which $2.6 million was recorded as short-term debt and $37.7 million was recorded as long-term debt. The buildings are being depreciated on a straight-line basis over the terms of the leases to their estimated residual values, which will equal the remaining financing obligation at the end of the lease term. At the end of the lease term, the remaining balances in property, plant and equipment, net and debt will be reversed against each other.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the maturities of the Company’s indebtedness as of December 28, 2014:

Sr. Unsecured Revolving Credit Facility Maturing 20195.0% Sr. Notes Maturing 2021Financing Lease ObligationsTotal
(In thousands)
2015$—$—$1,075$1,075
2016——1,1201,120
2017——1,1691,169
2018——1,3671,367
2019516,000—1,532517,532
2020 and thereafter—500,00033,009533,009
Total before unamortized discount516,000500,00039,2721,055,272
Unamortized discount—(2,305)—(2,305)
Total$516,000$497,695$39,272$1,052,967
Note 14:Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities as of December 28, 2014 and December 29, 2013 consisted of the following:

December 28, 2014December 29, 2013
(In thousands)
Payroll and incentives$61,018$52,865
Employee benefits40,31840,965
Deferred revenue168,928164,723
Federal, non-U.S. and state income taxes9,80111,783
Other accrued operating expenses122,956133,342
Total accrued expenses and other current liabilities$403,021$403,678
Note 15:Employee Benefit Plans

Savings Plan: The Company has a 401(k) Savings Plan for the benefit of all qualified U.S. employees, with such employees receiving matching contributions in the amount equal to 100.0% of the first 5.0% of eligible compensation up to applicable Internal Revenue Service limits. Such matching contributions have been in effect since February 1, 2011 for all employees except former employees of Caliper, who received matching contributions of 50.0% of the first 5.0% of eligible compensation up to applicable Internal Revenue Service limits until December 31, 2012, and received matching contributions of 100.0% of the first 5.0% of eligible compensation up to applicable Internal Revenue Service limits after December 31, 2012. Savings plan expense was $12.2 million in fiscal year 2014, $12.8 million in fiscal year 2013 and $12.3 million in fiscal year 2012.

Pension Plans: The Company has a defined benefit pension plan covering certain U.S. employees and non-U.S. pension plans for certain non-U.S. employees. The principal U.S. defined benefit pension plan was closed to new hires effective January 31, 2001, and benefits for those employed by the Company’s former Life Sciences businesses were frozen as of that date. Plan benefits were frozen as of March 2003 for those employed by the Company’s former Analytical Instruments business and corporate employees. Plan benefits were frozen as of January 31, 2011 for all remaining employees that were still actively accruing in the plan. The plans provide benefits that are based on an employee’s years of service and compensation near retirement.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net periodic pension cost (credit) for U.S. and non-U.S. plans included the following components for fiscal years ended:

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Service cost$4,070$3,664$3,852
Interest cost23,47521,33423,164
Expected return on plan assets(25,007)(25,106)(20,768)
Actuarial loss (gain)71,700(16,464)28,355
Amortization of prior service cost(281)(267)(242)
Net periodic pension cost (credit)$73,957$(16,839)$34,361

In the third quarter of fiscal year 2014, the Company notified employees of its intention to terminate their employment as part of the Q3 2014 restructuring plan. The removal of these participants may decrease the expected future service lives in excess of the curtailment limit for one of the Company's pension plans, which would result in a curtailment gain. If the curtailment occurs, the curtailment will be measured and recorded when the notified employees are separated from the Company. As part of a curtailment, the Company is required to remeasure the pension plan's assets and liabilities based upon current discount rates and the fair value of the pension plan's assets as of the curtailment date, which may result in an additional gain or (loss) in addition to the curtailment gain. Employee separation is expected to be completed during the first half of fiscal year 2015.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the changes in the funded status of the principal U.S. pension plan and the principal non-U.S. pension plans and the amounts recognized in the Company’s consolidated balance sheets as of December 28, 2014 and December 29, 2013.

December 28, 2014December 29, 2013
Non-U.S.U.S.Non-U.S.U.S.
(In thousands)
Actuarial present value of benefit obligations:
Accumulated benefit obligations$291,640$327,632$277,125$279,299
Change in benefit obligations:
Projected benefit obligations at beginning of year$288,216$279,299$278,707$301,770
Service cost2,6701,4002,5891,075
Interest cost10,57512,9009,83411,500
Benefits paid and plan expenses(12,280)(19,282)(11,218)(17,817)
Participants’ contributions394—391—
Plan settlement——(918)—
Actuarial loss (gain)42,09553,3151,678(17,229)
Effect of exchange rate changes(27,861)—7,153—
Projected benefit obligations at end of year$303,809$327,632$288,216$279,299
Change in plan assets:
Fair value of plan assets at beginning of year$143,704$249,756$114,515$221,755
Actual return on plan assets22,93925,78017,2018,818
Benefits paid and plan expenses(12,280)(19,282)(11,218)(17,817)
Employer’s contributions11,195—20,20037,000
Participants’ contributions394—391—
Plan settlement——(918)—
Effect of exchange rate changes(9,185)—3,533—
Fair value of plan assets at end of year156,767256,254143,704249,756
Net liabilities recognized in the consolidated balance sheets$(147,042)$(71,378)$(144,512)$(29,543)
Net amounts recognized in the consolidated balance sheets consist of:
Noncurrent assets$9,825$—$6,879$—
Current liabilities(6,786)—(7,360)—
Noncurrent liabilities(150,081)(71,378)(144,031)(29,543)
Net liabilities recognized in the consolidated balance sheets$(147,042)$(71,378)$(144,512)$(29,543)
Net amounts recognized in accumulated other comprehensive income consist of:
Prior service cost$(1,371)$—$(1,745)$—
Net amounts recognized in accumulated other comprehensive income$(1,371)$—$(1,745)$—
Actuarial assumptions as of the year-end measurement date:
Discount rate2.75%4.08%3.77%4.77%
Rate of compensation increase3.07%None3.23%None

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

December 28, 2014December 29, 2013December 30, 2012
Non-U.S.U.S.Non-U.S.U.S.Non-U.S.U.S.
Discount rate3.77%4.77%3.62%3.92%4.91%4.10%
Rate of compensation increase3.23%None2.88%None3.22%3.50%
Expected rate of return on assets5.30%7.25%5.50%7.50%5.40%7.75%

The following table provides a breakdown of the non-U.S. benefit obligations and fair value of assets for pension plans that have benefit obligations in excess of plan assets:

December 28, 2014December 29, 2013
(In thousands)
Pension Plans with Projected Benefit Obligations in Excess of Plan Assets
Projected benefit obligations$156,867$151,391
Fair value of plan assets——
Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets
Accumulated benefit obligations$153,239$148,235
Fair value of plan assets——

Assets of the defined benefit pension plans are primarily equity and debt securities. Asset allocations as of December 28, 2014 and December 29, 2013, and target asset allocations for fiscal year 2015 are as follows:

Target AllocationPercentage of Plan Assets at
January 3, 2016December 28, 2014December 29, 2013
Asset CategoryNon-U.S.U.S.Non-U.S.U.S.Non-U.S.U.S.
Equity securities45-55%40-50%49%39%51%43%
Debt securities45-55%50-60%50%61%48%57%
Other0-5%0-5%1%—%1%—%
Total100%100%100%100%100%100%

The Company maintains target allocation percentages among various asset classes based on investment policies established for the pension plans which are designed to maximize the total rate of return (income and appreciation) after inflation within the limits of prudent risk taking, while providing for adequate near-term liquidity for benefit payments.

The Company’s expected returns on assets assumptions are derived from management’s estimates, as well as other information compiled by management, including studies that utilize customary procedures and techniques. The studies include a review of anticipated future long-term performance of individual asset classes and consideration of the appropriate asset allocation strategy given the anticipated requirements of the plans to determine the average rate of earnings expected on the funds invested to provide for the pension plans benefits. While the study gives appropriate consideration to recent fund performance and historical returns, the assumption is primarily a long-term, prospective rate.

The Company's discount rate assumptions are derived from a range of factors, including a yield curve composed of the rates of return on high-quality fixed-income corporate bonds available at the measurement date and the related expected duration for the obligations.

For the plans in the United States, as of December 28, 2014 the Company adopted the new mortality base table, RP-2014, with projection scale, MP-2014, that was published by the Society of Actuaries in 2014. The adoption of the new mortality base table resulted in a $32.1 million increase to the projected benefit obligation at December 28, 2014 and is included within "Actuarial loss (gain)" in the Change in Benefit Obligation for fiscal year 2014 above.

The target allocations for plan assets are listed in the above table. Equity securities primarily include investments in large-cap and mid-cap companies located in the United States and abroad, and equity index funds. Debt securities include corporate bonds of companies from diversified industries, high-yield bonds, and U.S. government securities. Other types of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

investments include investments in non-U.S. government index linked bonds, multi-strategy hedge funds and venture capital funds that follow several different strategies.

The fair values of the Company’s pension plan assets as of December 28, 2014 and December 29, 2013 by asset category, classified in the three levels of inputs described in Note 21 to the consolidated financial statements are as follows:

Fair Value Measurements at December 28, 2014 Using:
Total Carrying Value at December 28, 2014Quoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
(In thousands)
Cash$4,971$4,971$—$—
Equity Securities:
U.S. large-cap28,60228,602——
International large-cap value25,20225,202——
Emerging markets growth13,01013,010——
Equity index funds77,432—77,432—
Domestic real estate funds2,8602,860——
Commodity funds7,4237,423——
Fixed income securities:
Non-U.S. Treasury Securities22,025—22,025—
Corporate and U.S. debt instruments147,83453,81394,021—
Corporate bonds25,164—25,164—
High yield bond funds3,6143,614——
Other types of investments:
Multi-strategy hedge funds23,332——23,332
Venture capital funds1——1
Non-U.S. government index linked bonds31,551—31,551—
Total assets measured at fair value$413,021$139,495$250,193$23,333

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value Measurements at December 29, 2013 Using:
Total Carrying Value at December 29, 2013Quoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
(In thousands)
Cash$4,458$4,458$—$—
Equity Securities:
U.S. large-cap34,12734,127——
International large-cap value27,59527,595——
Emerging markets growth12,51712,517——
Equity index funds73,796—73,796—
Domestic real estate funds2,4712,471——
Commodity funds8,1798,179——
Fixed income securities:
Non-U.S. Treasury Securities18,344—18,344—
Corporate and U.S. debt instruments132,82845,21587,613—
Corporate bonds22,619—22,619—
High yield bond funds6,1706,170——
Other types of investments:
Multi-strategy hedge funds22,689——22,689
Venture capital funds8——8
Non-U.S. government index linked bonds27,659—27,659—
Total assets measured at fair value$393,460$140,732$230,031$22,697

Valuation Techniques: Valuation techniques utilized need to maximize the use of observable inputs and minimize the use of unobservable inputs. There have been no changes in the methodologies utilized at December 28, 2014 compared to December 29, 2013. The following is a description of the valuation techniques utilized to measure the fair value of the assets shown in the table above.

Equity Securities: Shares of registered investment companies that are publicly traded are categorized as Level 1 assets; they are valued at quoted market prices that represent the net asset value of the fund. These instruments have active markets.

Equity index funds are mutual funds that are not publicly traded and are comprised primarily of underlying equity securities that are publicly traded on exchanges. Price quotes for the assets held by these funds are readily observable and available. Equity index funds are categorized as Level 2 assets.

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

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

Individual fixed income bonds are categorized as Level 2 assets except where sufficient quoted prices exist in active markets, in which case such securities are categorized as Level 1 assets. These securities are valued using third-party pricing services. These services may use, for example, model-based pricing methods that utilize observable market data as inputs. Broker dealer bids or quotes of securities with similar characteristics may also be used.

Other Types of Investments: Non-U.S. government index link bond funds are not publicly traded and are stated at net asset value as determined by the issuer of the fund based on the fair value of the underlying investments. Underlying investments consist of bonds in which payment of income on the principal is related to a specific price index and are categorized as Level 2 assets.

Hedge funds, private equity funds and venture capital funds are valued at fair value by using the net asset values provided by the investment managers and are updated, if necessary, using analytical procedures, appraisals, public market data and/or inquiry of the investment managers. The net asset values are determined based upon the fair values of the underlying investments in the funds. These other investments invest primarily in readily available marketable securities and allocate gains,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

losses, and expense to the investor based on the ownership percentage as described in the fund agreements. They are categorized as Level 3 assets.

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

A reconciliation of the beginning and ending Level 3 assets for fiscal years 2014, 2013, and 2012 is as follows:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):
Common Collective Trusts/Private FundsVenture Capital FundsMulti-strategy Hedge FundsTotal
(In thousands)
Balance at January 1, 2012$—$7$19,285$19,292
Realized losses1,162——1,162
Unrealized gains19—977996
Purchases9,448——9,448
Issuances, Sales and Settlements(10,467)——(10,467)
Balance at December 30, 2012162720,26220,431
Realized gains7——7
Unrealized (losses) gains(19)12,4272,409
Issuances, Sales and Settlements(150)——(150)
Balance at December 29, 2013—822,68922,697
Realized gains————
Unrealized (losses) gains—(7)643636
Purchases————
Issuances, Sales and Settlements————
Balance at December 28, 2014$—$1$23,332$23,333

The Company expects to contribute $20.0 million, in the aggregate, during the first quarter of fiscal year 2015, for the 2014 plan year to one of its plans within the United States. With respect to plans outside of the United States, the Company expects to contribute $10.2 million in the aggregate during fiscal year 2015. During fiscal year 2014, the Company made contributions of $11.2 million, in the aggregate, to plans outside of the United States. During fiscal year 2013, the Company made contributions of $37.0 million for the 2012 plan year to its defined benefit pension plan in the United States. During fiscal year 2013, the Company contributed $20.2 million, in the aggregate, to plans outside of the United States, which includes an additional contribution of $10.0 million to its defined benefit pension plan in the United Kingdom. During fiscal year 2012, the Company contributed $17.0 million for the 2011 plan year to its defined benefit pension plans in the United States, and $10.9 million in the aggregate to its defined benefit pension plans outside of the United States.

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

Non-U.S.U.S.
(In thousands)
2015$11,320$18,169
201611,83218,268
201712,02818,363
201812,47518,657
201913,06718,857
2020-202470,92697,713

The Company also sponsors a supplemental executive retirement plan to provide senior management with benefits in excess of normal pension benefits. Effective July 31, 2000, this plan was closed to new entrants. At December 28, 2014 and December 29, 2013, the projected benefit obligations were $24.5 million and $21.1 million, respectively. Assets with a fair

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

value of $0.5 million and $0.3 million, segregated in a trust (which is included in marketable securities and investments on the consolidated balance sheets), were available to meet this obligation as of December 28, 2014 and December 29, 2013, respectively. Pension income and expenses for this plan netted to an expense of $4.8 million in fiscal year 2014, income of $0.4 million in fiscal year 2013 and an expense of $2.5 million in fiscal year 2012.

Postretirement Medical Plans: The Company provides healthcare benefits for eligible retired U.S. employees under a comprehensive major medical plan or under health maintenance organizations where available. Eligible U.S. employees qualify for retiree health benefits if they retire directly from the Company and have at least ten years of service. Generally, the major medical plan pays stated percentages of covered expenses after a deductible is met and takes into consideration payments by other group coverage and by Medicare. The plan requires retiree contributions under most circumstances and has provisions for cost-sharing charges. Effective January 1, 2000, this plan was closed to new hires. For employees retiring after 1991, the Company has capped its medical premium contribution based on employees’ years of service. The Company funds the amount allowable under a 401(h) provision in the Company’s defined benefit pension plan. Assets of the plan are primarily equity and debt securities and are available only to pay retiree health benefits.

Net periodic postretirement medical benefit credit included the following components for the fiscal years ended:

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Service cost$95$106$106
Interest cost155135144
Expected return on plan assets(964)(965)(877)
Actuarial gain(384)(182)(929)
Net periodic postretirement medical benefit credit$(1,098)$(906)$(1,556)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the changes in the postretirement medical plan’s funded status and the amounts recognized in the Company’s consolidated balance sheets as of December 28, 2014 and December 29, 2013.

December 28, 2014December 29, 2013
(In thousands)
Actuarial present value of benefit obligations:
Retirees$1,159$1,331
Active employees eligible to retire388470
Other active employees1,7952,009
Accumulated benefit obligations at beginning of year3,3423,810
Service cost95106
Interest cost155135
Benefits paid(157)(189)
Actuarial loss (gain)141(520)
Change in accumulated benefit obligations during the year234(468)
Retirees1,0331,159
Active employees eligible to retire424388
Other active employees2,1191,795
Accumulated benefit obligations at end of year3,5763,342
Change in plan assets:
Fair value of plan assets at beginning of year13,39612,958
Actual return on plan assets1,332438
Fair value of plan assets at end of year14,72813,396
Net assets recognized in the consolidated balance sheets$11,152$10,054
Net amounts recognized in the consolidated balance sheets consist of:
Noncurrent assets$11,152$10,054
Net assets recognized in the consolidated balance sheets$11,152$10,054
Net amounts recognized in accumulated other comprehensive income consist of:
Prior service cost$—$—
Net amounts recognized in accumulated other comprehensive income$—$—
Actuarial assumptions as of the year-end measurement date:
Discount rate4.10%4.77%

Actuarial assumptions used to determine net cost during the year are as follows:

December 28, 2014December 29, 2013December 30, 2012
Discount rate4.77%3.86%4.00%
Expected rate of return on assets7.25%7.50%7.75%

The Company maintains a master trust for plan assets related to the U.S. defined benefit plans and the U.S. postretirement medical plan. Accordingly, investment policies, target asset allocations and actual asset allocations are the same as those disclosed for the U.S. defined benefit plans.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair values of the Company’s plan assets at December 28, 2014 and December 29, 2013 by asset category, classified in the three levels of inputs described in Note 21, are as follows:

Fair Value Measurements at December 28, 2014 Using:
Total Carrying Value at December 28, 2014Quoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
(In thousands)
Cash$248$248$—$—
Equity Securities:
U.S. large-cap1,6441,644——
International large-cap value1,4491,449——
Emerging markets growth748748——
Domestic real estate funds164164——
Commodity funds427427——
Fixed income securities:
Corporate debt instruments8,4993,0945,405—
High yield bond funds208208——
Other types of investments:
Multi-strategy hedge funds1,341——1,341
Total assets measured at fair value$14,728$7,982$5,405$1,341
Fair Value Measurements at December 29, 2013 Using:
Total Carrying Value at December 29, 2013Quoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
(In thousands)
Cash$167$167$—$—
Equity Securities:
U.S large-cap1,8311,831——
International large-cap value1,4801,480——
Emerging markets growth672672——
Domestic real estate funds133133——
Commodity funds439439——
Fixed income securities:
Corporate debt instruments7,1262,4264,700—
High yield bond funds331331——
Other types of investments:
Multi-strategy hedge funds1,217——1,217
Total assets measured at fair value$13,396$7,479$4,700$1,217

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Valuation Techniques: Valuation techniques are the same as those disclosed for the U.S. defined benefit plans above.

A reconciliation of the beginning and ending Level 3 assets for fiscal years 2014, 2013, and 2012 is as follows:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):
Common Collective Trusts/Private FundsVenture Capital FundsMulti-strategy Hedge FundsTotal
(In thousands)
Balance at January 1, 2012$—$1$1,129$1,130
Realized gains68——68
Unrealized gains1—5556
Purchases552——552
Issuances, Sales and Settlements(612)——(612)
Balance at December 30, 2012911,1841,194
Realized gains————
Unrealized (losses) gains(1)(1)3331
Purchases————
Issuances, Sales and Settlements(8)——(8)
Balance at December 29, 2013——1,2171,217
Realized gains————
Unrealized gains——124124
Purchases————
Issuances, Sales and Settlements————
Balance at December 28, 2014$—$—$1,341$1,341

The Company does not expect to make any contributions to the postretirement medical plan during fiscal year 2015.

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

Postretirement Medical Plan
(In thousands)
2015$167
2016174
2017182
2018192
2019200
2020-20241,159

Deferred Compensation Plans: During fiscal year 1998, the Company implemented a nonqualified deferred compensation plan that provides benefits payable to officers and certain key employees or their designated beneficiaries at specified future dates, or upon retirement or death. The plan was amended to eliminate deferral elections, with the exception of Company 401(k) excess contributions for eligible participants, for plan years beginning January 1, 2011. Benefit payments under the plan are funded by contributions from participants, and for certain participants, contributions by the Company. The obligations related to the deferred compensation plan totaled $1.0 million for both December 28, 2014 and December 29, 2013.

Note 16:Contingencies

The Company is conducting a number of environmental investigations and remedial actions at current and former locations of the Company and, along with other companies, has been named a potentially responsible party (“PRP”) for certain waste disposal sites. The Company accrues for environmental issues in the accounting period that the Company's responsibility is established and when the cost can be reasonably estimated. The Company has accrued $12.3 million and $13.5 million as of

December 28, 2014 and December 29, 2013, respectively, which represents its management’s estimate of the cost of the remediation of known environmental matters, and does not include any potential liability for related personal injury or property damage claims. These amounts are recorded in accrued expenses and other current liabilities. During fiscal year 2014, the Company recorded a benefit of $2.3 million for cost reimbursements related to a particular site for monitoring and mitigation activities. During fiscal year 2013, the Company accrued an additional $5.7 million related to a particular site for increased monitoring and mitigation activities. The Company's environmental accrual is not discounted and does not reflect the recovery of any material amounts through insurance or indemnification arrangements. The cost estimates are subject to a number of variables, including the stage of the environmental investigations, the magnitude of the possible contamination, the nature of the potential remedies, possible joint and several liability, the time period over which remediation may occur, and the possible effects of changing laws and regulations. For sites where the Company has been named a PRP, management does not currently anticipate any additional liability to result from the inability of other significant named parties to contribute. The Company expects that the majority of such accrued amounts could be paid out over a period of up to ten years. As assessment and remediation activities progress at each individual site, these liabilities are reviewed and adjusted to reflect additional information as it becomes available. There have been no environmental problems to date that have had, or are expected to have, a material adverse effect on the Company’s consolidated financial statements. While it is possible that a loss exceeding the amounts recorded in the consolidated financial statements may be incurred, the potential exposure is not expected to be materially different from those amounts recorded.

The Company is subject to various claims, legal proceedings and investigations covering a wide range of matters that arise in the ordinary course of its business activities. Although the Company has established accruals for potential losses that it believes are probable and reasonably estimable, in the opinion of the Company’s management, based on its review of the information available at this time, the total cost of resolving these contingencies at December 28, 2014 should not have a material adverse effect on the Company’s consolidated financial statements. However, each of these matters is subject to uncertainties, and it is possible that some of these matters may be resolved unfavorably to the Company.

Note 17:Warranty Reserves

The Company provides warranty protection for certain products usually for a period of one year beyond the date of sale. The majority of costs associated with warranty obligations include the replacement of parts and the time for service personnel to respond to repair and replacement requests. A warranty reserve is recorded based upon historical results, supplemented by management’s expectations of future costs. Warranty reserves are included in “Accrued expenses and other current liabilities” on the consolidated balance sheets.

A summary of warranty reserve activity for the fiscal years ended December 28, 2014, December 29, 2013 and December 30, 2012 is as follows:

(In thousands)
Balance at January 1, 2012$10,412
Provision charged to income17,750
Payments(18,022)
Adjustments to previously provided warranties, net801
Foreign currency translation and acquisitions62
Balance at December 30, 201211,003
Provision charged to income17,291
Payments(17,116)
Adjustments to previously provided warranties, net(693)
Foreign currency translation and acquisitions49
Balance at December 29, 201310,534
Provision charged to income17,447
Payments(16,750)
Adjustments to previously provided warranties, net73
Foreign currency translation and acquisitions(521)
Balance at December 28, 2014$10,783

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 18:Stock Plans

Stock-Based Compensation:

In addition to the Company’s Employee Stock Purchase Plan, the Company utilizes one stock-based compensation plan, the 2009 Incentive Plan (the “2009 Plan”). Under the 2009 Plan, 10.7 million shares of the Company's common stock are authorized for stock option grants, restricted stock awards, performance units and stock grants as part of the Company’s compensation programs. In addition to shares of the Company’s common stock originally authorized for issuance under the 2009 Plan, the 2009 Plan includes shares of the Company’s common stock previously granted under the Amended and Restated 2001 Incentive Plan and the 2005 Incentive Plan that were canceled or forfeited without the shares being issued.

The following table summarizes total pre-tax compensation expense recognized related to the Company’s stock options, restricted stock, restricted stock units, performance units and stock grants, net of estimated forfeitures, included in the Company’s consolidated statements of operations for fiscal years 2014, 2013, and 2012:

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Cost of product and service revenue$1,456$1,304$1,247
Research and development expenses546853747
Selling, general and administrative expenses12,46211,89618,631
Continuing operations stock-based compensation expense14,46414,05320,625
Discontinued operations stock-based compensation expense——406
Total stock-based compensation expense$14,464$14,053$21,031

The total income tax benefit recognized in the consolidated statements of operations for stock-based compensation was $5.4 million in fiscal year 2014, $4.4 million in fiscal year 2013 and $6.8 million in fiscal year 2012. Stock-based compensation costs capitalized as part of inventory were $0.3 million and $0.4 million as of December 28, 2014 and December 29, 2013, respectively. The excess tax benefit recognized from stock compensation, classified as a financing cash activity, was zero in both fiscal years 2014 and 2013, and $1.8 million in fiscal year 2012.

Stock Options: The Company has granted options to purchase common shares at prices equal to the market price of the common shares on the date the option is granted. Conditions of vesting are determined at the time of grant. Options are generally exercisable in equal annual installments over a period of three years, and will generally expire seven years after the date of grant. Options replaced in association with business combination transactions are generally issued with the same terms of the respective plans under which they were originally issued.

The fair value of each option grant is estimated using the Black-Scholes option pricing model. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility was calculated primarily based on the historical volatility of the Company’s stock. The average expected life was based on the contractual term of the option and historic exercise experience. The risk-free interest rate is based on United States Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. Forfeitures are estimated based on voluntary termination behavior, as well as an analysis of actual option forfeitures. The Company’s weighted-average assumptions used in the Black-Scholes option pricing model were as follows for the fiscal years ended:

December 28, 2014December 29, 2013December 30, 2012
Risk-free interest rate1.5%0.9%0.6%
Expected dividend yield0.7%0.8%1.2%
Expected lives5 years5 years4 years
Expected stock volatility30.9%38.5%38.7%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes stock option activity for the three fiscal years ended December 28, 2014:

December 28, 2014December 29, 2013December 30, 2012
Number of SharesWeighted- Average Exercise PriceNumber of SharesWeighted- Average Exercise PriceNumber of SharesWeighted- Average Exercise Price
(Shares in thousands)
Outstanding at beginning of year3,494$23.344,266$21.645,346$20.57
Granted52043.1251833.6275626.28
Exercised(1,024)23.89(947)21.45(1,611)20.16
Canceled(4)20.97(8)22.88(210)22.34
Forfeited(158)35.33(335)23.04(15)21.98
Outstanding at end of year2,828$26.113,494$23.344,266$21.64
Exercisable at end of year1,900$21.132,392$20.662,677$20.00

The aggregate intrinsic value for stock options outstanding at December 28, 2014 was $48.0 million with a weighted-average remaining contractual term of 3.4 years. The aggregate intrinsic value for stock options exercisable at December 28, 2014 was $41.7 million with a weighted-average remaining contractual term of 2.4 years. At December 28, 2014, there were 2.8 million stock options that were vested, and expected to vest in the future, with an aggregate intrinsic value of $47.7 million and a weighted-average remaining contractual term of 3.4 years.

The weighted-average per-share grant-date fair value of options granted during fiscal years 2014, 2013, and 2012 was $11.86, $10.82, and $7.36, respectively. The total intrinsic value of options exercised during fiscal years 2014, 2013, and 2012 was $22.0 million, $13.8 million, and $13.1 million, respectively. Cash received from option exercises for fiscal years 2014, 2013, and 2012 was $24.5 million, $20.3 million, and $32.5 million, respectively. The total compensation expense recognized related to the Company’s outstanding options was $5.0 million in fiscal year 2014, $4.4 million in fiscal year 2013 and $5.1 million in fiscal year 2012.

There was $5.6 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested stock options granted as of December 28, 2014. This cost is expected to be recognized over a weighted-average period of 1.8 years, and will be adjusted for any future changes in estimated forfeitures.

Restricted Stock Awards: The Company has awarded shares of restricted stock and restricted stock units to certain employees at no cost to them, which cannot be sold, assigned, transferred or pledged during the restriction period. The restricted stock and restricted stock units vest through the passage of time, assuming continued employment. The fair value of the award at the time of the grant is expensed on a straight line basis primarily in selling, general and administrative expenses over the vesting period, which is generally three years. These awards were granted under the Company’s 2009 Plan. Recipients of the restricted stock have the right to vote such shares and receive dividends.

The following table summarizes restricted stock award activity for the three fiscal years ended December 28, 2014:

December 28, 2014December 29, 2013December 30, 2012
Number of SharesWeighted- Average Grant- Date Fair ValueNumber of SharesWeighted- Average Grant- Date Fair ValueNumber of SharesWeighted- Average Grant- Date Fair Value
(Shares in thousands)
Nonvested at beginning of year649$29.24781$24.71672$23.62
Granted26142.6128933.8735825.86
Vested(258)27.64(346)22.98(184)23.19
Forfeited(94)33.58(75)28.76(65)24.03
Nonvested at end of year558$33.51649$29.24781$24.71

The fair value of restricted stock awards vested during fiscal years 2014, 2013, and 2012 was $7.1 million, $8.0 million, and $4.3 million, respectively. The total compensation expense recognized related to the restricted stock awards was $7.1 million in fiscal year 2014, $7.5 million in fiscal year 2013 and $8.2 million in fiscal year 2012.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 28, 2014, there was $10.0 million of total unrecognized compensation cost, net of forfeitures, related to nonvested restricted stock awards. That cost is expected to be recognized over a weighted-average period of 1.2 fiscal years.

Performance Units: The Company’s performance unit program provides a cash award based on the achievement of specific performance criteria. A target number of units are granted at the beginning of a three-year performance period. The number of units earned at the end of the performance period is determined by multiplying the number of units granted by a performance factor ranging from 0% to 200%. Awards are determined by multiplying the number of units earned by the stock price at the end of the performance period, and are paid in cash and accounted for as a liability based award. The compensation expense associated with these units is recognized over the period that the performance targets are expected to be achieved. The Company granted 79,463 performance units, 98,056 performance units, and 122,675 performance units during fiscal years 2014, 2013, and 2012, respectively. The weighted-average per-share grant-date fair value of performance units granted during fiscal years 2014, 2013, and 2012 was $42.84, $34.06, and $26.18, respectively. During fiscal years 2014, 2013, and 2012, 35,954, 28,515 and zero performance units were forfeited, respectively. The total compensation expense related to performance units was $1.6 million, $1.4 million, and $7.1 million for fiscal years 2014, 2013, and 2012, respectively. As of December 28, 2014, there were 235,725 performance units outstanding subject to forfeiture, with a corresponding liability of $4.1 million recorded in accrued expenses and long-term liabilities.

Stock Awards: The Company’s stock award program provides non-employee Directors an annual equity award. For fiscal years 2014, 2013, and 2012 the award equaled the number of shares of the Company’s common stock which has an aggregate fair market value of $100,000 on the date of the award. The stock award is prorated for non-employee Directors who serve for only a portion of the year. The compensation expense associated with these stock awards is recognized when the stock award is granted. In fiscal years 2014, 2013, and 2012, each non-employee Director was awarded 2,373 shares, 3,263 shares, and 3,580 shares, respectively. The Company also granted 955 shares to a new non-employee Director during fiscal year 2012. The weighted-average per-share grant-date fair value of stock awards granted during fiscal years 2014, 2013, and 2012 was $42.14, $30.65, and $27.87, respectively. In fiscal years 2014, 2013, and 2012, the total compensation expense recognized related to these stock awards was $0.7 million.

Employee Stock Purchase Plan:

In April 1999, the Company’s shareholders approved the 1998 Employee Stock Purchase Plan. In April 2005, the Compensation and Benefits Committee of the Board voted to amend the Employee Stock Purchase Plan, effective July 1, 2005, whereby participating employees have the right to purchase common stock at a price equal to 95% of the closing price on the last day of each six-month offering period. The number of shares which an employee may purchase, subject to certain aggregate limits, is determined by the employee’s voluntary contribution, which may not exceed 10% of the employee’s base compensation. During fiscal year 2014, the Company issued 60,870 shares of common stock under the Company’s Employee Stock Purchase Plan at a weighted-average price of $41.71 per share. During fiscal year 2013, the Company issued 89,521 shares under this plan at a weighted-average price of $30.51 per share. During fiscal year 2012, the Company issued 53,961 shares under this plan at a weighted-average price of $24.51 per share. At December 28, 2014 there remains available for sale to employees an aggregate of 1.0 million shares of the Company’s common stock out of the 5.0 million shares authorized by shareholders for issuance under this plan.

Note 19:Stockholders’ Equity

Comprehensive Income:

The components of accumulated other comprehensive income consisted of the following:

Foreign Currency Translation Adjustment, net of taxUnrecognized Prior Service Costs, net of taxUnrealized (Losses) Gains on Securities, net of taxUnrealized and Realized (Losses) Gains on Derivatives, net of taxAccumulated Other Comprehensive Income
(In thousands)
Balance, January 1, 2012$56,164$2,169$(159)$(4,088)$54,086
Current year change11,363(82)301,19612,507
Balance, December 30, 201267,5272,087(129)(2,892)66,593
Current year change8,756(658)82,89210,998
Balance, December 29, 201376,2831,429(121)—77,591
Current year change(52,951)14614—(52,791)
Balance, December 28, 2014$23,332$1,575$(107)$—$24,800

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During fiscal year 2013, pre-tax losses of $4.8 million were reclassified from accumulated other comprehensive income into interest and other expense, net, related to previously settled cash flow hedges, which includes $2.8 million for the remaining unamortized derivative losses that were reclassified when the Company redeemed all of its 2015 Notes. The Company recognized a tax provision of $1.9 million related to these amounts reclassified out of accumulated other comprehensive income for fiscal year 2013. During fiscal year 2012, pre-tax losses of $2.0 million were reclassified from accumulated other comprehensive income into interest and other expense, net related to previously settled cash flow hedges. The Company recognized a tax provision of $0.8 million related to this amount reclassified out of accumulated other comprehensive income during fiscal year 2012. During fiscal years 2014, 2013, and 2012, pre-tax income of $0.1 million, pre-tax expenses of $0.7 million, and pre-tax expenses of $0.1 million, respectively, were reclassified from accumulated other comprehensive income into selling, general and administrative expenses as a component of net periodic benefit cost.

Stock Repurchase Program:

On October 24, 2012, the Board of Directors (the "Board") authorized the Company to repurchase up to 6.0 million shares of common stock under a stock repurchase program (the "Repurchase Program"). The Repurchase Program expired on October 24, 2014. On October 23, 2014, the Board authorized the Company to repurchase up to 8.0 million shares of common stock under a new stock repurchase program (the "New Repurchase Program"). The New Repurchase Program will expire on October 23, 2016 unless terminated earlier by the Board, and may be suspended or discontinued at any time. During fiscal year 2014, the Company repurchased 1.4 million shares of common stock in the open market at an aggregate cost of $61.3 million, including commissions, under these repurchase programs. During fiscal year 2013, the Company repurchased approximately 3.6 million shares of common stock in the open market at an aggregate cost of $123.0 million, including commissions, under the Repurchase Program. During fiscal year 2012, the Company did not repurchase any shares of common stock under any stock repurchase program. As of December 28, 2014, approximately 7.4 million shares authorized by the Board under the New Repurchase Program remained available for repurchase.

The Board has authorized the Company to repurchase shares of common stock to satisfy minimum statutory tax withholding obligations in connection with the vesting of restricted stock awards and restricted stock unit awards granted pursuant to the Company’s equity incentive plans and to satisfy obligations related to the exercise of stock options made pursuant to the Company's equity incentive plans. During fiscal year 2014, the Company repurchased 98,269 shares of common stock for this purpose at an aggregate cost of $4.3 million. During fiscal year 2013, the Company repurchased 127,544 shares of common stock for this purpose at an aggregate cost of $4.4 million. During fiscal year 2012, the Company repurchased 82,186 shares of common stock for this purpose at an aggregate cost of $2.1 million.

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

Dividends:

The Board declared a regular quarterly cash dividend of $0.07 per share in each quarter of fiscal years 2014 and 2013. At December 28, 2014, the Company has accrued $7.9 million for dividends declared on October 23, 2014 for the fourth quarter of fiscal year 2014 payable in February 2015. On January 23, 2015, the Company announced that the Board had declared a quarterly dividend of $0.07 per share for the first quarter of fiscal year 2015 that will be payable in May 2015. In the future, the Board may determine to reduce or eliminate the Company’s common stock dividend in order to fund investments for growth, repurchase shares or conserve capital resources.

Note 20:Derivatives and Hedging Activities

The Company uses derivative instruments as part of its risk management strategy only, and includes derivatives utilized as economic hedges that are not designated as hedging instruments. By nature, all financial instruments involve market and credit risks. The Company enters into derivative instruments with major investment grade financial institutions and has policies to monitor the credit risk of those counterparties. The Company does not enter into derivative contracts for trading or other speculative purposes, nor does the Company use leveraged financial instruments. Approximately 60% of the Company’s business is conducted outside of the United States, generally in foreign currencies. The fluctuations in foreign currency can increase the costs of financing, investing and operating the business. The intent of these economic hedges is to offset gains and losses that occur on the underlying exposures from these currencies, with gains and losses resulting from the forward currency contracts that hedge these exposures.

In the ordinary course of business, the Company enters into foreign exchange contracts for periods consistent with its committed exposures to mitigate the effect of foreign currency movements on transactions denominated in foreign currencies. Transactions covered by hedge contracts include intercompany and third-party receivables and payables. The contracts are

primarily in European and Asian currencies, have maturities that do not exceed 12 months, have no cash requirements until maturity, and are recorded at fair value on the Company’s consolidated balance sheets. Unrealized gains and losses on the Company’s foreign currency contracts are recognized immediately in earnings for hedges designated as fair value and, for hedges designated as cash flow, the related unrealized gains or losses are deferred as a component of other comprehensive income in the accompanying consolidated balance sheets. Deferred gains and losses are recognized in income in the period in which the underlying anticipated transaction occurs and impacts earnings.

Principal hedged currencies include the British Pound, Euro, Japanese Yen and Singapore Dollar. The Company held forward foreign exchange contracts, designated as fair value hedges, with U.S. dollar equivalent notional amounts totaling $95.0 million at December 28, 2014, $138.4 million at December 29, 2013, and $64.3 million at December 30, 2012, and the fair value of these foreign currency derivative contracts was insignificant. The gains and losses realized on foreign currency derivative contracts are not material. The duration of these contracts was generally 30 days or less during each of fiscal years 2014, 2013, and 2012.

During fiscal year 2014, the Company entered into five forward foreign exchange contracts with settlement dates in fiscal year 2015 and combined Euro denominated notional amounts of €238.2 million, designated as cash flow hedges, that were intended to hedge movements in foreign exchange rates prior to settlement of certain intercompany loan agreements. The fair value of these currency derivative contracts at December 28, 2014 was not material. The unrealized gain, which was recorded in other comprehensive income, will be recognized in interest and other expense, net, in the period in which the underlying hedged transaction occurs and impacts earnings. Such amounts were not material for fiscal year 2014. During December 2012, the Company entered into forward foreign exchange contracts with settlement dates in fiscal year 2013 and combined Euro denominated notional amounts of €50.0 million, designated as cash flow hedges. During fiscal year 2013, the Company settled these Euro denominated forward foreign exchange contracts. The derivative gains were recognized in the period in which the underlying hedged exposures occurred and impacted earnings, and were recorded in interest and other expense, net. Such amounts were not material for fiscal year 2013.

In May 2008, the Company settled forward interest rate contracts with notional amounts totaling $150.0 million upon the issuance of its 2015 Notes, and recognized $8.4 million, net of taxes of $5.4 million, of accumulated derivative losses in other comprehensive income. During each of fiscal years 2013 and 2012, the Company amortized a pre-tax loss of $2.0 million into interest and other expense, net. In addition, during fiscal year 2013, the Company redeemed all of its 2015 Notes and recognized a pre-tax loss of $2.8 million for the remaining unamortized derivative losses into interest and other expense, net.

The Company does not expect any material net pre-tax gains or losses to be reclassified from accumulated other comprehensive income into interest and other expense, net within the next twelve months.

Note 21:Fair Value Measurements

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents, derivatives, marketable securities and accounts receivable. The Company believes it had no significant concentrations of credit risk as of December 28, 2014.

The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during fiscal years 2014 and 2013. The Company’s financial assets and liabilities carried at fair value are primarily comprised of marketable securities, derivative contracts used to hedge the Company’s currency risk, and acquisition related contingent consideration. The Company has not elected to measure any additional financial instruments or other items at fair value.

Valuation Hierarchy: The following summarizes the three levels of inputs required to measure fair value. For Level 1 inputs, the Company utilizes quoted market prices as these instruments have active markets. For Level 2 inputs, the Company utilizes quoted market prices in markets that are not active, broker or dealer quotations, or utilizes alternative pricing sources with reasonable levels of price transparency. For Level 3 inputs, the Company utilizes unobservable inputs based on the best information available, including estimates by management primarily based on information provided by third-party fund managers, independent brokerage firms and insurance companies. A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following tables show the assets and liabilities carried at fair value measured on a recurring basis as of December 28, 2014 and December 29, 2013 classified in one of the three classifications described above:

Fair Value Measurements at December 28, 2014 Using:
Total Carrying Value at December 28, 2014Quoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
(In thousands)
Marketable securities$1,568$1,568$—$—
Foreign exchange derivative assets3,205—3,205—
Foreign exchange derivative liabilities(302)—(302)—
Contingent consideration(91)——(91)
Fair Value Measurements at December 29, 2013 Using:
Total Carrying Value at December 29, 2013Quoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
(In thousands)
Marketable securities$1,319$1,319$—$—
Foreign exchange derivative assets293—293—
Foreign exchange derivative liabilities, net(396)—(396)—
Contingent consideration(4,926)——(4,926)

Level 1 and Level 2 Valuation Techniques: The Company’s Level 1 and Level 2 assets and liabilities are comprised of investments in equity and fixed-income securities as well as derivative contracts. For financial assets and liabilities that utilize Level 1 and Level 2 inputs, the Company utilizes both direct and indirect observable price quotes, including common stock price quotes, foreign exchange forward prices and bank price quotes. Below is a summary of valuation techniques for Level 1 and Level 2 financial assets and liabilities.

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

Foreign exchange derivative assets and liabilities: Include foreign exchange derivative contracts that are valued using quoted forward foreign exchange prices at the reporting date. The Company’s foreign exchange derivative contracts are subject to master netting arrangements that allow the Company and its counterparties to net settle amounts owed to each other. Derivative assets and liabilities that can be net settled under these arrangements have been presented in the Company's consolidated balance sheet on a net basis and are recorded in other assets. As of both December 28, 2014 and December 29, 2013, none of the master netting arrangements involved collateral.

Level 3 Valuation Techniques: The Company’s Level 3 liabilities are comprised of contingent consideration related to acquisitions. For liabilities that utilize Level 3 inputs, the Company uses significant unobservable inputs. Below is a summary of valuation techniques for Level 3 liabilities.

Contingent consideration: The Company has classified its net liabilities for contingent consideration relating to its acquisitions within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs, which included probability weighted cash flows. 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. Increases or decreases in the fair value of contingent consideration liabilities primarily result from changes in the estimated probabilities of achieving revenue thresholds or product development milestones during the earnout period. The Company may have to pay contingent consideration, related to all acquisitions with open contingency periods, of up to $31.4 million as of December 28, 2014. As of December 28, 2014, the Company has recorded contingent consideration obligations relating to its acquisition of Tetra Teknolojik Sistemler Limited Sirketi with an estimated fair value of $0.1 million. The earnout period for each of these acquisitions does not exceed three years from the respective acquisition date, and the remaining weighted average earnout period at December 28, 2014 was one year.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

(In thousands)
Balance at January 1, 2012$(20,298)
Additions(1,900)
Amounts paid and foreign currency translation17,433
Change in fair value (included within selling, general and administrative expenses)1,748
Balance at December 30, 2012(3,017)
Additions(1,100)
Amounts paid and foreign currency translation135
Change in fair value (included within selling, general and administrative expenses)(944)
Balance at December 29, 2013(4,926)
Additions—
Amounts paid and foreign currency translation2,074
Change in fair value (included within selling, general and administrative expenses)2,761
Balance at December 28, 2014$(91)

During the fourth quarter of fiscal year 2012, the Company recorded $74.2 million of pre-tax intangible asset impairment charges related to certain trade names. A description of these impairment charges is included within Note 12. The fair value measurements were determined using a relief from royalty method, which incorporates unobservable inputs, thereby classifying the fair value measurements as a Level 3 measurement within the fair value hierarchy. The primary inputs used in the relief from royalty method, an income-based approach, included estimated prospective cash flows considering the revised useful lives and an estimated royalty rate that would be used by a market participant. The royalty rates ranged from 0.5% to 1.0%, the discount rates ranged from 11.0% to 12.0%, and the useful lives ranged from 1 to 8 years. The identified indefinite-lived intangibles related to the above impairment charges, had a carrying value of $76.4 million and a fair value of $4.5 million as of the impairment date, resulting in an impairment loss of $71.9 million. The identified definite-lived intangibles related to the above impairment charges, had a carrying value of $3.8 million and a fair value of $1.5 million as of the impairment date, resulting in an impairment loss of $2.3 million.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturities of these assets and liabilities. If measured at fair value, cash and cash equivalents would be classified as Level 1.

The Company’s new senior unsecured revolving credit facility, which provides for $700.0 million of revolving loans, had amounts outstanding, excluding letters of credit, of $516.0 million as of December 28, 2014. The Company’s previous senior unsecured revolving credit facility had amounts outstanding, excluding letters of credit, of $397.0 million as of December 29, 2013. The interest rate on the Company’s senior unsecured revolving credit facility is reset at least monthly to correspond to variable rates that reflect currently available terms and conditions for similar debt. The Company had no change in credit standing during fiscal year 2014. Consequently, the carrying value of the current year and prior year credit facilities approximate fair value and would be classified as Level 2.

The Company's 2021 Notes, with a face value of $500.0 million, had an aggregate carrying value of $497.7 million, net of $2.3 million of unamortized original issue discount, and a fair value of $542.7 million as of December 28, 2014. The 2021 Notes had an aggregate carrying value of $497.4 million, net of $2.6 million of unamortized original issue discount, and a fair value of $513.0 million as of December 29, 2013. The fair value of the 2021 Notes is estimated using market quotes from brokers and is based on current rates offered for similar debt. The Company's financing lease obligations had an aggregate carrying value of $39.3 million and $40.3 million as of December 28, 2014 and December 29, 2013, respectively, and approximated the fair value as there has been minimal change in the Company's incremental borrowing rate. As of December 28, 2014, the 2021 Notes and financing lease obligations were classified as Level 2.

As of December 28, 2014, there has not been any significant impact to the fair value of the Company’s derivative liabilities due to credit risk. Similarly, there has not been any significant adverse impact to the Company’s derivative assets based on the evaluation of its counterparties’ credit risks.

Note 22:Leases

The Company leases certain property and equipment under operating leases. Rental expense charged to continuing operations for fiscal years 2014, 2013, and 2012 amounted to $54.8 million, $52.6 million, and $60.2 million, respectively. Minimum rental commitments under noncancelable operating leases are as follows: $54.8 million in fiscal year 2015, $36.3 million in fiscal year 2016, $28.1 million in fiscal year 2017, $23.9 million in fiscal year 2018, $20.7 million in fiscal year 2019 and $77.2 million in fiscal year 2020 and thereafter.

On August 22, 2013, the Company sold one of its facilities located in Boston, Massachusetts for net proceeds of $47.6 million. Simultaneously with the closing of the sale of the property, the Company entered into a lease agreement to lease back the property for its continued use. The lease has an initial term of 15 years and the Company has the right to extend the term of the lease for two additional periods of ten years each. The lease is accounted for as an operating lease and at the transaction date the Company had deferred $26.5 million of gains which are being amortized in operating expenses over the initial lease term of 15 years. During fiscal years 2014 and 2013, the Company amortized $1.8 million and $0.6 million, respectively, of deferred gains related to the lease. The deferred gains remaining to be amortized were $24.1 million at December 28, 2014 and $25.9 million at December 29, 2013, which were recorded in long-term liabilities.

Note 23:Industry Segment and Geographic Area Information

The Company discloses information about its operating segments based on the way that management organizes the segments within the Company for making operating decisions and assessing financial performance. The Company evaluates the performance of its operating segments based on revenue and operating income. Intersegment revenue and transfers are not significant. The Company’s management reviews the results of the Company’s operations by the Human Health and Environmental Health operating segments. The accounting policies of the operating segments are the same as those described in Note 1. The principal products and services of these two operating segments are:

•Human Health. Develops diagnostics, tools and applications to help detect diseases earlier and more accurately and to accelerate the discovery and development of critical new therapies. The Human Health segment serves both the diagnostics and research markets.
•Environmental Health. Provides products, services and solutions to facilitate the creation of safer food and consumer products, more secure surroundings and efficient energy resources. The Environmental Health segment serves the environmental, industrial and laboratory services markets.

The Company has included the expenses for its corporate headquarters, such as legal, tax, audit, human resources, information technology, and other management and compliance costs, as well as the activity related to the mark-to-market adjustment on postretirement benefit plans, as “Corporate” below. The Company has a process to allocate and recharge expenses to the reportable segments when these costs are administered or paid by the corporate headquarters based on the extent to which the segment benefited from the expenses. These amounts have been calculated in a consistent manner and are included in the Company’s calculations of segment results to internally plan and assess the performance of each segment for all purposes, including determining the compensation of the business leaders for each of the Company’s operating segments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Human Health
Product revenue$996,767$957,022$926,733
Service revenue246,635244,088237,892
Total revenue1,243,4021,201,1101,164,625
Operating income from continuing operations(1)220,165156,45263,773
Environmental Health
Product revenue543,308541,048547,941
Service revenue450,509415,428392,622
Total revenue993,817956,476940,563
Operating income from continuing operations(1)109,12997,052111,844
Corporate
Operating loss from continuing operations(2)(3)(118,552)(25,710)(72,497)
Continuing Operations
Product revenue$1,540,075$1,498,070$1,474,674
Service revenue697,144659,516630,514
Total revenue2,237,2192,157,5862,105,188
Operating income from continuing operations210,742227,794103,120
Interest and other expense, net (see Note 5)41,13964,11047,956
Income from continuing operations before income taxes$169,603$163,684$55,164
(1)Pre-tax impairment charges have been included in the Human Health and Environmental Health operating income from continuing operations. The Company had no pre-tax impairment charges in fiscal year 2014. The Company recognized a $0.2 million pre-tax impairment charge in the Human Health segment in fiscal year 2013. The Company recognized $73.4 million of pre-tax impairment charges in the Human Health segment and also recognized $0.7 million of pre-tax impairment charges in the Environmental Health segment in fiscal year 2012.
(2)Activity related to the mark-to-market adjustment on postretirement benefit plans has been included in the Corporate operating loss from continuing operations, and in the aggregate constituted a pre-tax loss of $75.9 million in fiscal year 2014, pre-tax income of $17.6 million in fiscal year 2013, and a pre-tax loss of $31.8 million in fiscal year 2012.
(3)Includes expenses related to litigation with Enzo Biochem, Inc. and Enzo Life Sciences, Inc. (collectively, “Enzo”). Enzo filed a complaint in 2002 alleging that the Company separately and together with other defendants breached distributorship and settlement agreements with Enzo, infringed Enzo's patents, engaged in unfair competition and fraud, and committed torts against Enzo by, among other things, engaging in commercial development and exploitation of Enzo's patented products and technology. The Company entered into a settlement agreement with Enzo dated June 20, 2014 and during fiscal year 2014 paid $7.0 million into a designated escrow account to resolve this matter, of which $3.7 million had been accrued in previous years and $3.3 million was recorded during fiscal year 2014. In addition, $3.4 million of expenses were incurred and recorded in preparation for the trial during fiscal year 2014.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Additional information relating to the Company’s reporting segments is as follows for the three fiscal years ended December 28, 2014:

Depreciation and Amortization ExpenseCapital Expenditures
December 28, 2014December 29, 2013December 30, 2012December 28, 2014December 29, 2013December 30, 2012
(In thousands)(In thousands)
Human Health$89,969$98,582$99,597$15,201$20,900$24,518
Environmental Health24,73625,91523,00112,14916,53214,488
Corporate2,0312,3822,5281,7221,5493,395
Continuing operations116,736126,879125,12629,07238,98142,401
Discontinued operations$339$1,590$1,741$213$10$7
Total Assets
December 28, 2014December 29, 2013December 30, 2012
(In thousands)
Human Health$2,645,411$2,692,809$2,700,565
Environmental Health1,453,6831,213,8011,153,444
Corporate34,98134,27133,952
Net current and long-term assets of discontinued operations—5,83113,801
Total assets$4,134,075$3,946,712$3,901,762

The following geographic area information for continuing operations includes revenue based on location of external customer for the three fiscal years ended December 28, 2014 and net long-lived assets based on physical location as of December 28, 2014 and December 29, 2013:

Revenue
December 28, 2014December 29, 2013December 30, 2012
(In thousands)
U.S.$849,356$826,991$812,934
International:
China276,230254,838216,425
United Kingdom134,614133,611118,611
Germany107,08199,153105,735
Japan93,81195,676114,300
Italy85,43378,12069,599
France84,94681,71984,395
Other international605,748587,478583,189
Total international1,387,8631,330,5951,292,254
Total sales$2,237,219$2,157,586$2,105,188

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Long-Lived Assets
December 28, 2014December 29, 2013December 30, 2012
(In thousands)
U.S.$198,675$214,721$200,539
International:
China36,79730,68230,134
United Kingdom13,0339,8822,960
Finland12,75813,63511,851
Singapore7,0416,8126,366
Italy4,1072,7353,303
Netherlands3,6144,0373,900
Germany2,4932,5912,353
Brazil2,0991,9671,515
Mexico1,9381,0161,353
Other international8,6278,0628,889
Total international92,50781,41972,624
Total net long-lived assets$291,182$296,140$273,163

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 24:Quarterly Financial Information (Unaudited)

Selected quarterly financial information is as follows for the fiscal years ended:

First QuarterSecond QuarterThird QuarterFourth Quarter(1)(2)Year
(In thousands, except per share data)
December 28, 2014
Revenue$530,610$556,170$542,049$608,390$2,237,219
Gross profit235,713247,984243,309277,6021,004,608
Restructuring and contract termination charges, net2,13574211,092(579)13,390
Operating income from continuing operations51,76269,63758,77630,567210,742
Income from continuing operations before income taxes40,47360,67347,81020,647169,603
Income from continuing operations34,95152,00342,89831,314161,166
Net income34,22450,49042,27730,787157,778
Basic earnings per share:
Income from continuing operations$0.31$0.46$0.38$0.28$1.43
Net income0.300.450.380.271.40
Diluted earnings per share:
Income from continuing operations$0.31$0.46$0.38$0.28$1.42
Net income0.300.440.370.271.39
Cash dividends declared per common share0.070.070.070.070.28
December 29, 2013
Revenue$502,943$540,673$522,100$591,870$2,157,586
Gross profit224,442241,662233,268276,770976,142
Restructuring and contract termination charges, net3,31019,2471,12410,21133,892
Operating income from continuing operations36,69440,21657,95492,930227,794
Income from continuing operations before income taxes24,65427,35145,61466,065163,684
Income from continuing operations32,77527,27440,76373,455174,267
Net income32,21627,92540,19866,873167,212
Basic earnings per share:
Income from continuing operations$0.29$0.24$0.36$0.65$1.55
Net income0.280.250.360.601.49
Diluted earnings per share:
Income continuing operations$0.29$0.24$0.36$0.65$1.54
Net income0.280.250.360.591.47
Cash dividends declared per common share0.070.070.070.070.28
(1)The fourth quarter of fiscal year 2014 includes a pre-tax loss of $75.9 million as a result of the mark-to-market adjustment on postretirement benefit plans. See Note 1 for a discussion of this accounting policy.
(2)The fourth quarter of fiscal year 2013 includes pre-tax income of $17.6 million as a result of the mark-to-market adjustment on postretirement benefit plans. The fourth quarter of fiscal year 2013 also includes a tax benefit of $9.2 million related to discrete items primarily for lapses in statutes of limitations and audit settlements.

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