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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 Firm52
Consolidated Statements of Operations for Each of the Three Fiscal Years in the Period Ended December 30, 201853
Consolidated Statements of Comprehensive Income for Each of the Three Fiscal Years in the Period Ended December 30, 201854
Consolidated Balance Sheets as of December 30, 2018 and December 31, 201755
Consolidated Statements of Stockholders’ Equity for Each of the Three Fiscal Years in the Period Ended December 30, 201856
Consolidated Statements of Cash Flows for Each of the Three Fiscal Years in the Period Ended December 30, 201857
Notes to Consolidated Financial Statements58

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of PerkinElmer, Inc. and subsidiaries (the “Company”) as of December 30, 2018 and December 31, 2017, 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 30, 2018, the related notes, and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 30, 2018 and December 31, 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 30, 2018, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 30, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2019 expressed an unqualified opinion on the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company adopted Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers,” using the modified retrospective adoption method on January 1, 2018.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s / DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 26, 2019

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

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Fiscal Years Ended

December 30, 2018December 31, 2017January 1, 2017
(In thousands, except per share data)
Revenue
Product revenue$1,935,493$1,477,414$1,396,896
Service revenue842,503779,568718,621
Total revenue2,777,9962,256,9822,115,517
Cost of product revenue908,228707,962663,795
Cost of service revenue528,829475,266437,361
Selling, general and administrative expenses811,913626,018590,471
Research and development expenses193,998139,464124,184
Restructuring and contract termination charges, net11,14412,6575,124
Operating income from continuing operations323,884295,615294,582
Interest and other expense, net66,201(1,103)50,514
Income from continuing operations before income taxes257,683296,718244,068
Provision for income taxes20,208139,82828,362
Income from continuing operations237,475156,890215,706
Income from discontinued operations before income taxes—65022,229
(Loss) gain on disposition of discontinued operations before income taxes(859)179,615619
(Benefit from) provision for income taxes on discontinued operations and dispositions(1,311)44,5224,255
Income from discontinued operations and dispositions452135,74318,593
Net income$237,927$292,633$234,299
Basic earnings per share:
Income from continuing operations$2.15$1.43$1.97
Income from discontinued operations and dispositions0.001.240.17
Net income$2.15$2.67$2.14
Diluted earnings per share:
Income from continuing operations$2.13$1.42$1.96
Income from discontinued operations and dispositions0.001.220.17
Net income$2.13$2.64$2.12

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Fiscal Years Ended

December 30, 2018December 31, 2017January 1, 2017
(In thousands)
Net income$237,927$292,633$234,299
Other comprehensive (loss) income
Foreign currency translation adjustments, net of tax(123,388)54,341(54,077)
Reclassification of taxes on foreign currency translation adjustments to earnings upon adoption of ASU 2018-02(6,489)——
Unrecognized prior service costs, net of tax(77)(77)(860)
Unrealized (losses) gains on securities, net of tax(9)7932
Other comprehensive (loss) income(129,963)54,343(54,905)
Comprehensive income$107,964$346,976$179,394

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

CONSOLIDATED BALANCE SHEETS

As of the Fiscal Years Ended

December 30, 2018December 31, 2017
(In thousands, except share and per share data)
Current assets:
Cash and cash equivalents$163,111$202,134
Accounts receivable, net632,669552,304
Inventories338,347351,675
Other current assets100,50793,842
Total current assets1,234,6341,199,955
Property, plant and equipment, net318,590298,066
Intangible assets, net1,199,6671,346,940
Goodwill2,952,6083,002,198
Other assets, net270,023244,304
Total assets$5,975,522$6,091,463
Current liabilities:
Current portion of long-term debt$14,856$217,306
Accounts payable220,949222,093
Accrued restructuring and contract termination charges4,8348,759
Accrued expenses and other current liabilities528,827500,642
Current liabilities of discontinued operations2,1652,102
Total current liabilities771,631950,902
Long-term debt1,876,6241,788,803
Long-term liabilities742,312848,570
Total liabilities3,390,5673,588,275
Commitments and contingencies (see Notes 15 and 18)
Stockholders’ equity:
Preferred stock—$1 par value per share, authorized 1,000,000 shares; none issued or outstanding——
Common stock—$1 par value per share, authorized 300,000,000 shares; issued and outstanding 110,597,000 and 110,361,000 shares at December 30, 2018 and December 31, 2017, respectively110,597110,361
Capital in excess of par value48,77258,828
Retained earnings2,602,0672,380,517
Accumulated other comprehensive loss(176,481)(46,518)
Total stockholders’ equity2,584,9552,503,188
Total liabilities and stockholders’ equity$5,975,522$6,091,463

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Fiscal Years Ended December 30, 2018

Common Stock AmountCapital in Excess of Par ValueRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders’ Equity
(In thousands)
Balance, January 3, 2016$112,034$52,932$1,991,431$(45,956)$2,110,441
Adjustment to recognize prior year's unrecognized excess tax benefits upon adoption of ASU 2016-09—17714,051—14,228
Net income——234,299—234,299
Other comprehensive loss———(54,905)(54,905)
Dividends——(30,629)—(30,629)
Exercise of employee stock options and related income tax benefits57613,842——14,418
Issuance of common stock for employee stock purchase plans502,413——2,463
Purchases of common stock(3,275)(58,058)(90,468)—(151,801)
Issuance of common stock for long-term incentive program23210,193——10,425
Stock compensation—4,631——4,631
Balance, January 1, 2017$109,617$26,130$2,118,684$(100,861)$2,153,570
Net income——292,633—292,633
Other comprehensive income———54,34354,343
Dividends——(30,800)—(30,800)
Exercise of employee stock options and related income tax benefits57817,426——18,004
Issuance of common stock for employee stock purchase plans372,430——2,467
Purchases of common stock(79)(4,288)——(4,367)
Issuance of common stock for long-term incentive program20812,145——12,353
Stock compensation—4,985——4,985
Balance, December 31, 2017$110,361$58,828$2,380,517$(46,518)$2,503,188
Cumulative effect of adopting ASC 606——10,209—10,209
Impact of adopting ASU 2016-16——(2,062)—(2,062)
Impact of adopting ASU 2018-02——6,489(6,489)—
Net income——237,927—237,927
Other comprehensive loss———(123,474)(123,474)
Dividends——(31,013)—(31,013)
Exercise of employee stock options and related income tax benefits70924,124——24,833
Issuance of common stock for employee stock purchase plans211,464——1,485
Purchases of common stock(717)(56,676)——(57,393)
Issuance of common stock for long-term incentive program22315,650——15,873
Stock compensation—5,382——5,382
Balance, December 30, 2018$110,597$48,772$2,602,067$(176,481)$2,584,955

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Fiscal Years Ended

December 30, 2018December 31, 2017January 1, 2017
(In thousands)
Operating activities:
Net income$237,927$292,633$234,299
Income from discontinued operations and dispositions, net of income taxes(452)(135,743)(18,593)
Income from continuing operations237,475156,890215,706
Adjustments to reconcile income from continuing operations to net cash provided by continuing operations:
Restructuring and contract termination charges, net11,14412,6575,124
Depreciation and amortization180,588105,00099,972
Stock-based compensation28,76725,42117,158
Pension and other postretirement expense (benefits)11,915(10,439)14,511
Change in fair value of contingent consideration14,6392,16216,183
Deferred taxes(51,103)28,854(6,526)
Contingencies and non-cash tax matters(671)182(291)
Amortization of deferred debt issuance costs and accretion of discounts3,3412,5922,137
(Gain) loss on disposition of businesses and assets, net(12,844)309(5,562)
Amortization of acquired inventory revaluation19,2726,188396
Gain on sale of investments, net(557)——
Changes in assets and liabilities which provided (used) cash, excluding effects from companies acquired:
Accounts receivable, net(94,512)(36,633)(18,960)
Inventories(30,183)(17,923)6,752
Accounts payable8,90034,33130,716
Accrued expenses and other(14,933)(17,436)(53,540)
Net cash provided by operating activities of continuing operations311,238292,155323,776
Net cash (used in) provided by operating activities of discontinued operations(200)(3,702)26,839
Net cash provided by operating activities311,038288,453350,615
Investing activities:
Capital expenditures(93,253)(39,089)(31,702)
Settlement of cash flow hedges—36,541—
Purchases of investments(7,019)(10,783)—
Proceeds from disposition of businesses38,0271,10021,000
Proceeds from surrender of life insurance policies724544
Activity related to acquisitions, net of cash and cash equivalents acquired(97,686)(1,527,183)(71,924)
Net cash used in investing activities of continuing operations(159,859)(1,539,369)(82,582)
Net cash provided by (used in) investing activities of discontinued operations—272,779(1,302)
Net cash used in investing activities(159,859)(1,266,590)(83,884)
Financing activities:
Payments on borrowings(1,264,000)(235,965)(902,507)
Proceeds from borrowings857,0001,060,952420,507
Proceeds from sale of senior debt369,340—546,190
Payments of debt financing costs(2,634)—(7,868)
Net payments on other credit facilities(28,383)(2,831)(1,096)
Settlement of cash flow hedges(34,132)(13,824)(1,900)
Payments for acquisition-related contingent consideration(12,800)(8,940)(155)
Proceeds from issuance of common stock under stock plans24,83318,00414,418
Purchases of common stock(57,445)(3,834)(151,801)
Dividends paid(31,009)(30,793)(30,799)
Net cash (used in) provided by financing activities of continuing operations(179,230)782,769(115,011)
Net cash used in financing activities of discontinued operations—(533)—
Net cash (used in) provided by financing activities(179,230)782,236(115,011)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(8,004)21,703(13,422)
Net (decrease) increase in cash, cash equivalents and restricted cash(36,055)(174,198)138,298
Cash, cash equivalents and restricted cash at beginning of year202,370376,568238,270
Cash, cash equivalents and restricted cash at end of year$166,315$202,370$376,568
Supplemental disclosures of cash flow information
Reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total shown in the consolidated statements of cash flows:
Cash and cash equivalents163,111202,134359,265
Restricted cash included in other current assets3,20423617,303
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows$166,315$202,370$376,568
Cash paid during the year for:
Interest$56,451$35,780$30,718
Income taxes$59,844$77,607$43,549

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, life sciences and applied markets. Through its advanced technologies and differentiated solutions, critical issues are addressed that help to improve lives and the world around us.

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: Discovery & Analytical Solutions and Diagnostics. The Company's Discovery & Analytical Solutions segment focuses on service and innovating for customers spanning the life sciences and applied markets. The Company's Diagnostics segment is targeted towards meeting the needs of clinically-oriented customers, especially within the growing areas of reproductive health, emerging market diagnostics and applied genomics.

The Company's fiscal year ends on the Sunday nearest December 31. The Company reports fiscal years under a 52/53 week format and as a result, certain fiscal years will contain 53 weeks. Each of the fiscal years ended December 30, 2018 ("fiscal year 2018"), December 31, 2017 ("fiscal year 2017") and January 1, 2017 ("fiscal year 2016") included 52 weeks. The fiscal year ending December 29, 2019 will include 52 weeks.

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 enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. The Company recognizes revenue in an amount that reflects the consideration the Company expects to receive in exchange for the promised products or services when a performance obligation is satisfied by transferring control of those products or services to customers.

Taxes that are collected by the Company from a customer and assessed by a governmental authority, that are both imposed on and concurrent with a specific revenue-producing transaction, are excluded from revenue.

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. When the Company determines during the period that previously undistributed earnings of certain international subsidiaries no longer meet the requirements of indefinite reinvestment, the Company recognizes the income tax expense in that period.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 8 below for additional details.

The Company uses an individual unit of account approach for releasing the income tax effects of unrealized gains and losses from Accumulated Other Comprehensive Income ("AOCI").

Property, Plant and Equipment: The Company depreciates property, 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 8 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 the calendar month-end that is closest to the Company's fiscal year end and accordingly will be recorded in the fourth quarter, unless the Company is required to perform an interim remeasurement. 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 (loss) 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.

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. Measurement period adjustments are made in the period in which the amounts are determined and the current period income effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. All changes that do not qualify as measurement period adjustments are also 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 a trade name that is not subject to amortization; and (iii) amortizing intangibles, which consist of patents, trade names and trademarks, licenses, customer relationships and purchased technologies, which are being amortized over their estimated useful lives.

The process of testing goodwill for impairment involves the determination of the fair value of the applicable reporting units. The test consists of the comparison of the fair value to the carrying value of the reporting unit to determine if the carrying value exceeds the fair value. If the carrying value of the reporting unit exceeds its fair value, an impairment loss in an amount equal to that excess is recognized up to the amount of goodwill. This annual impairment assessment is performed by the Company on the later of January 1 or the first day of each fiscal year. 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 non-amortizing intangible asset exceeds its fair value, an impairment loss in an amount equal to that excess is recognized up to the amount of the amortizing intangible asset. In addition, the Company evaluates the remaining useful life of its non-amortizing intangible asset at least annually to determine whether events or circumstances continue to support an indefinite useful life. If events or circumstances indicate that the useful life of non-amortizing intangible asset is no longer indefinite, the asset will be tested for impairment. The intangible asset will then be amortized prospectively over its estimated remaining useful life and accounted for in the same manner as other intangible assets that are subject to amortization. Amortizing intangible assets are reviewed for impairment when indicators of impairment are present. 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 14 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 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 term and the expected price volatility of the underlying stock. The Company estimates the expected term assumption based on historical experience. In determining the Company’s expected stock price volatility assumption, the Company reviews both the historical and implied volatility of the Company’s common stock, 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 20 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 (loss) 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 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 its productivity initiatives. In connection with these initiatives, the Company has recorded restructuring charges, as more fully described in Note 6 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Comprehensive Income: 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.

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 (loss) 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. 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 interest and other expense, net on the consolidated financial statements.

The Company also uses foreign currency denominated debt to hedge its investments in certain foreign subsidiaries. Realized and unrealized translation adjustments from these hedges are included in the foreign currency translation component of AOCI, as well as the offset translation adjustments on the underlying net assets of foreign subsidiaries. The cumulative translation gains or losses will remain in AOCI until the foreign subsidiaries are liquidated or sold.

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

In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract ("ASU 2018-15"). ASU 2018-15 aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software (and hosting arrangements that include an internal-use software license). Specifically, ASU 2018-15 amends Intangibles-Goodwill and Other (Topic 350) to include in its scope implementation costs incurred in a hosting arrangement that is a service contract and clarifies that a customer should apply Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The provisions of this guidance are to be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. ASU 2018-15 is effective for annual reporting periods beginning after December 15, 2019, and interim periods within those years with early adoption permitted. The Company is currently evaluating the requirements of this guidance and has not yet determined the impact of its adoption on the Company's consolidated financial position, results of operations and cash flows.

In August 2018, the FASB issued Accounting Standards Update No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14"). ASU 2018-14 adds, removes, and clarifies disclosure requirements related to defined benefit pension and other postretirement plans. ASU 2018-14 adds requirements for an entity to disclose the weighted-average interest crediting rates used in the entity’s cash balance pension plans and other similar plans; and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. Further, ASU 2018-14 removes guidance that currently requires the following disclosures: the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year; the amount and timing of plan assets expected to be returned to the employer; information about (1) benefits covered by related-party insurance and annuity contracts and (2) significant transactions between the plan and related parties; and the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost, and the benefit obligation for postretirement health care benefits. ASU 2018-14 also clarifies the guidance in Compensation-Retirement Benefits (Topic 715-20-50-3) on

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

defined benefit plans to require disclosure of (1) the projected benefit obligation ("PBO") and fair value of plan assets for pension plans with PBOs in excess of plan assets (the same disclosure with reference to the accumulated postretirement benefit obligation rather than the PBO is required for other postretirement benefit plans) and (2) the accumulated benefit obligation ("ABO") and fair value of plan assets for pension plans with ABOs in excess of plan assets. The provisions of this guidance are to be applied retrospectively to all periods presented upon their effective date. ASU 2018-14 is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those years with early adoption permitted. The Company is currently evaluating the requirements of this guidance and has not yet determined the impact of its adoption on the Company's consolidated financial position, results of operations and cash flows.

In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). ASU 2018-13 adds, removes, and modifies certain disclosures related to fair value measurements. ASU 2018-13 adds requirements for an entity to disclose the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. Further, ASU 2018-13 removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. ASU 2018-13 also modifies existing disclosure requirements related to measurement uncertainty. The amendments regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments are to be applied retrospectively to all periods presented upon their effective date. ASU 2018-13 is effective for annual reporting periods beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted for any removed or modified disclosures. The Company is currently evaluating the requirements of this guidance and has not yet determined the impact of its adoption on the Company's consolidated financial position, results of operations and cash flows.

In June 2018, the FASB issued Accounting Standards Update No. 2018-07, Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting ("ASU 2018-07") which supersedes Subtopic 505-50, Equity - Equity-Based Payments to Non-employees, and expands the scope of Topic 718 (which currently only includes share-based payments to employees) to also include share-based payments issued to non-employees for goods and services, except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards, except for financing transactions, or awards issued to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers ("Topic 606"). The provisions of this guidance are to be applied using a modified retrospective approach, with a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year, for all (1) liability-classified non-employee awards that have not been settled as of the adoption date and (2) equity-classified non-employee awards for which a measurement date has not been established. ASU 2018-07 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606. The Company early adopted the provisions of this guidance effective July 2, 2018. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flow.

In March 2018, the FASB Issued Accounting Standards Update No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 ("ASU 2018-05"). ASU 2018-05 was issued to incorporate into Topic 740 recent SEC guidance related to the income tax accounting implications of the Tax Cut and Jobs Act (the "Tax Act"). The SEC issued Staff Accounting Bulletin No. 118 ("SAB 118") to address concerns about reporting entities’ ability to timely comply with the accounting requirements to recognize all of the effects of the Tax Act in the period of enactment. SAB 118 permits companies to disclose that some or all of the income tax effects from the Tax Act are incomplete by the due date of the financial statements, and if possible, disclose a reasonable estimate of such tax effects. ASU 2018-05 is effective immediately. The Company is applying the guidance in ASU 2018-05 when accounting for the enactment date effects of the Tax Act. At December 30, 2018, the Company completed the accounting for all of the tax effects of the Tax Act using reasonable estimates of their effects based on currently available information. These estimates may be affected as additional clarification and implementation guidance becomes available. These changes could be material to the Company's income tax expense. See Note 8 for further disclosures.

In February 2018, the FASB Issued Accounting Standards Update No. 2018-03, Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2018-03"). ASU 2018-03 was issued to clarify certain aspects of guidance concerning the recognition of financial assets and liabilities established in Accounting Standards Update No. 2016-01, Financial Instruments - Overall

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(Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"). This includes treatment for discontinuations and adjustments for equity securities without a readily determinable market value, forward contracts and purchased options, presentation requirements for certain fair value option liabilities, fair value option liabilities denominated in a foreign currency, and transition guidance for equity securities without a readily determinable fair value. ASU 2018-03 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. Early adoption is permitted for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, as long as the Company has adopted ASU 2016-01. The Company adopted the provisions of this guidance effective July 2, 2018. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In February 2018, the FASB Issued Accounting Standards Update No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"). ASU 2018-02 provides entities with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act (or portion thereof) is recorded. ASU 2018-02 requires entities to disclose a description of the accounting policy for releasing income tax effects from AOCI; whether they elect to reclassify the stranded income tax effects from the Tax Act; and information about the other income tax effects that are reclassified. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, and entities should apply the proposed amendments either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The Company adopted ASU 2018-02 on December 30, 2018. The adoption of the standard resulted in an increase in retained earnings at December 30, 2018 in the amount of $6.5 million, with a corresponding decrease in AOCI. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows, other than the impact discussed above.

In August 2017, the FASB issued Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"), which amends the hedge accounting recognition and presentation requirements in Topic 815. ASU 2017-12 makes targeted changes to the existing hedge accounting model to better align an entity’s financial reporting for hedging relationships with the entity’s risk management activities, and to reduce the complexity of, and simplify the application of, the hedge accounting model. Specifically, ASU 2017-12 expands the types of transactions eligible for hedge accounting, eliminates the requirement to separately measure and present hedge ineffectiveness, simplifies the way assessments of hedge ineffectiveness may be performed, relaxes the documentation requirements for entering into hedging positions, provides targeted improvements to fair value hedges of interest rate risk, and permits an entity to exclude the change in the fair value of cross-currency basis spreads in currency swaps from the assessment of hedge effectiveness. The standard also requires entities to provide new disclosures about the impact fair value and cash flow hedges have on their income statements and about cumulative basis adjustments arising from fair value hedges. The provisions of this guidance are to be applied using a modified retrospective approach to existing hedging relationships as of the adoption date. However, the transition provisions allow for certain elections at the date of adoption and entities may choose to apply any of the provided elections. ASU 2017-12 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted, including adoption in any interim period. The Company early adopted the provisions of this guidance effective January 1, 2018. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In May 2017, the FASB issued Accounting Standards Update No. 2017-09, Compensation - Stock Compensation (Topic 718), Scope of Modification Accounting ("ASU 2017-09"), which amends the scope of modification accounting for share-based payment arrangements. ASU 2017-09 provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under Topic 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. If an entity modifies its awards and concludes that it is not required to apply modification accounting under the standard, it must still consider whether the modification affects its application of other guidance. Additionally, if a significant modification does not result in incremental compensation cost, entities are required to disclose the “lack of” incremental compensation cost resulting from such significant modification. The standard also removes the guidance in Topic 718 stating that modification accounting is not required when an entity adds an antidilution provision as long as that modification is not made in contemplation of an equity restructuring. The provisions of this guidance are to be applied on a prospective basis to awards modified on or after the effective date. ASU 2017-09 is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted, including adoption in any interim period. The Company adopted ASU 2017-09 effective January 1, 2018. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In March 2017, the FASB issued Accounting Standards Update No. 2017-07, Compensation - Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"), which amends the requirements in Topic 715 related to the income statement presentation of the components of net periodic benefit cost for an entity’s sponsored defined benefit pension and other postretirement plans. ASU 2017-07 requires entities to (1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present it with other current employee compensation costs in their income statements and (2) present the other components elsewhere in their income statements and outside of income from operations, and disclose the income statement lines that contain the other components if they are not presented on appropriately described separate lines. Additionally, the standard requires that only the service-cost component of net benefit cost is eligible for capitalization (e.g., as part of inventory or property, plant, and equipment). The change in income statement presentation requires retrospective application, while the change in capitalized benefit cost is to be applied prospectively. ASU 2017-07 is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The standard provides a practical expedient that permits entities to use the components of cost disclosed in prior years as a basis for the retrospective application of the new income statement presentation. Entities need to disclose the use of the practical expedient. The Company adopted ASU 2017-07 effective January 1, 2018 using a retrospective approach for each period presented. For the fiscal years 2017 and 2016, $(9.2) million and $11.5 million, respectively, of net periodic pension (credit) cost previously presented within operating income has been presented outside of operating income in the line item "Interest and other expense, net" in the consolidated statements of operations due to the retrospective adoption of ASU 2017-07. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows, other than the impact discussed above.

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business ("ASU 2017-01"), which amends Topic 805 to provide a screen to determine when a set of assets and liabilities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the standard (1) requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) removes the evaluation of whether a market participant could replace missing elements. The standard provides a framework to assist entities in evaluating whether both an input and a substantive process are present. The standard also provides a framework that includes two sets of criteria to consider that depend on whether a set has outputs and a more stringent criteria for sets without outputs. Lastly, the standard narrows the definition of the term "output" so that the term is consistent with how outputs are described in Topic 606, Revenue from Contracts with Customers. The provisions of this guidance are to be applied prospectively. ASU 2017-01 is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years, with early adoption permitted in limited circumstances. The Company adopted ASU 2017-01 effective January 1, 2018. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash ("ASU 2016-18"), which amends Topic 230 to add or clarify guidance on the classification and presentation of restricted cash in the statement of cash flows. The standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The provisions of this guidance are to be applied using a retrospective transition method to each period presented. ASU 2016-18 is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company adopted ASU 2016-18 effective January 1, 2018. For the fiscal years 2017 and 2016, $17.2 million and $(17.0) million, respectively, of changes in restricted cash balances that were previously presented within investing activities in the consolidated statements of cash flows have been excluded from the cash flows used in investing activities and the effect of exchange rate changes increased by $0.2 million in fiscal year 2017, due to the retrospective adoption of ASU 2016-18. Restricted cash amounting to $17.3 million and $0.2 million at January 1, 2017 and December 31, 2017, respectively, have been included with the cash and cash equivalents when reconciling the beginning of period and end of period total amounts on the consolidated statement of cash flows for the fiscal year ended December 31, 2017. Restricted cash amounting to $0.3 million and $17.3 million at January 3, 2016 and January 1, 2017, respectively, have been included with the cash and cash equivalents when reconciling the beginning of period and end of period total amounts on the consolidated statement of cash flows for the fiscal year ended January 1, 2017. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows, other than the impact discussed above.

In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740), Intra-entity Transfer of Assets Other than Inventory ("ASU 2016-16"). ASU 2016-16 removes the prohibition in Topic 740 against the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The standard requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The provisions of this guidance are to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. ASU 2016-16 is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company adopted ASU 2016-16 on January 1, 2018. The adoption of the standard resulted in a decrease in the retained earnings at January 1, 2018 of approximately $2.1 million with corresponding increase in deferred tax assets of $10.7 million and decrease in prepaid taxes of $12.8 million related to prior years’ intra-entity transfers of assets other than inventory. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows, other than the impact discussed above.

In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230 and other topics. The provisions of this guidance are to be applied using a retrospective transition method to each period presented, and if it is impracticable to apply the amendments retrospectively for some of the issues, ASU 2016-15 allows the amendments for those issues to be applied prospectively as of the earliest date practicable. ASU 2016-15 is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company adopted ASU 2016-15 effective January 1, 2018. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard requires entities to use the expected loss impairment model and will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance sheet credit exposures. Entities are required to estimate the lifetime “expected credit loss” for each applicable financial asset and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard also amends the impairment model for available-for-sale (“AFS”) debt securities and requires entities to determine whether all or a portion of the unrealized loss on an AFS debt security is a credit loss. An entity will recognize an allowance for credit losses on an AFS debt security as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment. The provisions of this guidance are to be applied using a modified-retrospective approach. A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. The Company is currently evaluating the requirements of this guidance and has not yet determined the impact of its adoption on the Company's consolidated financial position, results of operations and cash flows.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease of assets will primarily depend on its classification as a finance or operating lease. ASU 2016-02 also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The provisions of this guidance are effective for annual periods beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. ASU 2016-02 is to be applied using a modified retrospective approach. Subsequent to the issuance of ASU 2016-02, in July 2018, the FASB issued Accounting Standards Update No. 2018-10, Codification Improvements to Topic 842, Leases ("ASU 2018-10") and Accounting Standards Update No. 2018-11, Leases (Topic 842): Targeted Improvements ("ASU 2018-11"). The amendments in ASU 2018-10 clarify, correct or remove inconsistencies in the guidance provided under ASU 2016-02 related to sixteen specific issues identified. The amendments in ASU 2018-11 provide entities with an additional (and optional) transition method to adopt the new leases standard. Under the new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity's reporting for the comparative periods presented in the financial statements in the period of adoption will continue to be in accordance with ASC 840, Leases ("ASC 840"). An entity that elects this additional (and optional) transition method must provide the required disclosures under ASC 840 for all periods that continue to be in accordance with ASC 840. ASU 2018-11 also provides lessors with a practical expedient, by class of underlying asset, to not separate nonlease components from the associated lease component and, instead,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

to account for those components as a single component if certain criteria are met. The effective date and transition requirements for these two standards are the same as the effective date and transition requirements of ASU 2016-02. The standards were effective for the Company beginning on December 31, 2018. The Company did not early adopt these standards and adopted these standards using the optional transition method.

The Company elected to apply the modified retrospective approach, and applied the new leases standard at December 31, 2018, with a cumulative effect adjustment recognized in the opening balance of retained earnings in fiscal year 2019. As a lessee, the most significant impact of the standards relates to the recognition of the right-of-use assets and lease liabilities for the operating leases in the balance sheet. In addition, the Company had deferred gains from a sale-leaseback transaction that are being amortized in operating expenses over the lease term and the lease is accounted for as an operating lease under ASC 840. Under the new standards, the Company will recognize the deferred gains from the sale as a cumulative-effect adjustment in retained earnings at December 31, 2018. The Company will also derecognize the impact of its build-to-suit arrangement in which the Company was the deemed owner during the construction period, for which the construction is complete and the lease commenced before the initial date of adoption. The adoption of the standards will result in an increase in retained earnings at December 31, 2018 of approximately $19.1 million for the cumulative effect of initially applying the standards as of that date. In addition, the adoption of the standards will result in recognition of right-of-use assets of approximately $190.7 million and lease liabilities of approximately $137.7 million, primarily related to the facilities operating leases, a decrease in property and equipment of approximately $31.9 million and an increase in deferred tax liabilities of $2.1 million for the tax impact of the cumulative adjustments. The adoption will have no impact to cash from or used in operating, investing or financing activities in the Company's consolidated statement of cash flows at December 31, 2018.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). Under this new guidance, an entity should use a five-step process to recognize revenue, depicting 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. Subsequent to the issuance of the standard, the FASB decided to defer the effective date for one year to annual reporting periods beginning after December 15, 2017, with early adoption permitted for annual reporting periods beginning after December 15, 2016. In November 2017, the FASB also issued Accounting Standards Update No. 2017-14, Income Statement-Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606). ASU 2017-14 includes amendments to certain SEC paragraphs within the FASB Accounting Standards Codification ("Codification"). ASU 2017-14 amends the Codification to incorporate SEC Staff Accounting Bulletin No. 116 and SEC Interpretive Release on Vaccines for Federal Government Stockpiles (SEC Release No. 33-10403) to align existing SEC staff guidance with Revenue from Contracts with Customers (Topic 606). In May 2016, the FASB also issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients ("ASU 2016-12"), which amended its revenue recognition guidance in ASU 2014-09 on transition, collectability, non-cash consideration, contract modifications and completed contracts at transition and the presentation of sales and other similar taxes collected from customers. In April 2016, the FASB also issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing ("ASU 2016-10"), which amended its revenue recognition guidance in ASU 2014-09 on identifying performance obligations to allow entities to disregard items that are immaterial in the context of the contract, clarify when a promised good or service is separately identifiable (i.e., distinct within the context of the contract) and allow an entity to elect to account for the cost of shipping and handling performed after control of a good has been transferred to the customer as a fulfillment cost (i.e., an expense). ASU 2016-10 also clarifies how an entity should evaluate the nature of its promise in granting a license of intellectual property ("IP") and requires entities to classify IP in one of two categories: functional IP or symbolic IP, which will determine whether it recognizes revenue over time or at a point in time. ASU 2016-10 also address how entities should consider license renewals and restrictions and apply the exception for sales- and usage-based royalties received in exchange for licenses of IP. In March 2016, the FASB also issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net) ("ASU 2016-08"), which amended the principal-versus-agent implementation guidance and illustrations in ASU 2014-09. ASU 2016-08 clarifies that an entity should evaluate when it is the principal or agent for each specified good or service promised in a contract with a customer. ASU 2017-14, ASU 2016-12, ASU 2016-10, ASU 2016-08 and ASU 2014-09 may be adopted either using a full retrospective approach or a modified retrospective approach. The standards were effective for the Company beginning on January 1, 2018. The Company did not early adopt these standards and adopted these standards using the modified retrospective approach.

The most significant impact of the standards relates to the accounting for certain transactions with multiple elements or “bundled” arrangements. Specifically, for sales of software subscriptions or sales of licenses and maintenance, the Company will recognize the license revenue predominantly at the time of billing and delivery rather than recognizing the entire sales price ratably over the maintenance period, which is the Company's previous practice. In addition, for certain sales of

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instruments that include customer-specified acceptance criteria, the Company will recognize revenue when the customer obtains control of the instrument which is typically upon delivery or when title has transferred to the customer, as the Company believes acceptance is perfunctory. The Company will also capitalize incremental commission fees as a result of obtaining contracts when these fees are recoverable and will amortize the assets based on the transfer of goods or services to which the assets relate which typically range from two to six years. The Company elected to apply the modified retrospective approach only to contracts not completed as of January 1, 2018. The adoption of the standards resulted in an increase in the retained earnings at January 1, 2018 of approximately $10.2 million for the cumulative effect of initially applying the standards at January 1, 2018. In addition, the adoption of the standards resulted primarily in a reduction in deferred revenue of approximately $11.5 million, mainly driven by the upfront recognition of license revenue and certain multi-year software subscriptions, and an increase in deferred tax liability of approximately $3.0 million for the tax impact of the cumulative adjustments. The cumulative effect of recognizing instrument sales upon delivery or transfer of title and capitalizing the incremental commission fees were not material at January 1, 2018. The adoption of the standards had no impact to cash from or used in operating, investing, or financing activities in the Company's consolidated statement of cash flows at January 1, 2018. Refer to Note 3, Changes in Accounting Policies, for the impact of adoption of the standards on the Company's consolidated financial statements for the fiscal year ended December 30, 2018. Also refer to Note 2, Revenue, for the disclosures required by the standards.

Note 2: Revenue

Nature of goods and services

The following is a description of principal activities, by reportable segments, from which the Company generates its revenue. For more detailed information about the reportable segments, see Note 25.

i. Discovery & Analytical Solutions

The Discovery & Analytical Solutions ("DAS") segment of the Company principally generates revenue from sales of (a) instruments, consumables and services in the applied markets and (b) instruments, reagents, informatics, detection and imaging technologies, extended warranties, training and services in the life sciences market. Products and services may be sold separately or in bundled packages. The typical length of a contract for service is 12 to 36 months.

For bundled packages, the Company accounts for individual products and services separately if they are distinct - i.e. if a product or service is separately identifiable from other items in the bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The consideration (including any discounts) is allocated between separate products and services in a bundle based on their stand-alone selling prices. The stand-alone selling prices are determined based on the prices at which the Company separately sells the products, extended warranties, and services. For items that are not sold separately, the Company estimates stand-alone selling prices by reference to the amount charged for similar items on a stand-alone basis.

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

In instances where the timing of revenue recognition differs from the timing of invoicing, the Company determined that the contracts generally do not include a significant financing component. The primary purpose of its invoicing terms is to provide customers with simplified and predictable ways of purchasing products and services, rather than to receive financing from the customers or to provide customers with financing. Examples include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period, and multi-year software licenses or software subscriptions that are invoiced annually with revenue recognized upfront. In limited circumstances where the Company provides the customer with a significant benefit of financing, the Company uses the practical expedient and only adjusts the transaction price for the effects of the time value of money and only on contracts where the duration of financing is more than one year.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Products and servicesNature, timing of satisfaction of performance obligations, and significant payment terms
InstrumentsFor instruments that include installation, and if the installation meets the criteria to be considered a separate performance obligation, product revenue is generally recognized upon delivery or when title has transferred to the customer, which is generally the point in time where control of the products has been transferred to customers, and installation revenue is recognized when the installation is complete. Certain of the Company's products require specialized installation and configuration at the customer's site. Revenue for these products is deferred until installation is complete and customer acceptance has been received. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 to 60 days.
Consumables and reagentsThe Company recognizes revenue from the sale of consumables and reagents upon delivery or when title has transferred to the customer, which is generally the point in time where control of the products has been transferred to customers. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 days.
Software licenses and subscriptionsCustomers may purchase perpetual or term licenses, or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. The Company sells its software subscriptions or software licenses with maintenance services and, in some cases, with consulting services. The Company recognizes revenue for the software upfront at the point in time when the software is made available to the customer. For maintenance and consulting services, revenue is recognized ratably over the period in which the services are provided. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. Software subscriptions and maintenance service contracts are non-cancelable.
Cloud servicesCloud services, which allow customers to use hosted software over the contract period without taking possession of the software, are provided on either a subscription or consumption basis. Revenue related to cloud services provided on a subscription basis is recognized ratably over the contract period. Revenue related to cloud services provided on a consumption basis, such as the amount of storage used in a period, is recognized based on the customer utilization of such resources. Payment terms are generally net 30 days from signing of contract and contracts are non-cancelable.
Extended warrantyThe Company recognizes revenue for extended warranties on a straight-line basis over the extended warranty period in service revenue. In the majority of countries in which the Company operates, the customary warranty period is one year and the extended warranty covers periods beyond year one. Customers typically pay for extended warranties on an annual basis over the term of the warranty. In general, customers can cancel the extended warranty at any time with 30 days notice without significant penalty.
Laboratory services and trainingThe Company's service offerings include service contracts, field service, including related time and materials, and training. The Company recognizes revenue as the services are performed. Revenue for the service contracts is recognized over the contract period or at a point in time when the service is billable based on time and materials. The Company recognizes revenue as training is provided in service revenue. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In general, customers can cancel the service contracts at any time with 30 to 90 days notice without significant penalty.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

ii. Diagnostics

The Diagnostics segment of the Company principally generates revenue from sales of instruments, solutions, consumables, reagents, extended warranties and services in the diagnostics market. Products and services may be sold separately or in bundled packages.

For bundled packages, the Company accounts for individual products and services separately if they are distinct - i.e. if a product or service is separately identifiable from other items in the bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The consideration (including any discounts) is allocated between separate products and services in a bundle based on their stand-alone selling prices. The stand-alone selling prices are determined based on the prices at which the Company separately sells the products, extended warranties, and services. For items that are not sold separately, the Company estimates stand-alone selling prices by reference to the amount charged for similar items on a stand-alone basis.

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

In instances where the timing of revenue recognition differs from the timing of invoicing, the Company determined that the contracts generally do not include a significant financing component. The primary purpose of its invoicing terms is to provide customers with simplified and predictable ways of purchasing products and services, rather than to receive financing from the customers or to provide customers with financing. Examples include invoicing at the beginning of a storage period with revenue recognized ratably over the contract period. In limited circumstances where the Company provides the customer with a significant benefit of financing, the Company uses the practical expedient and only adjusts the transaction price for the effects of the time value of money and only on contracts where the duration of financing is more than one year.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Products and servicesNature, timing of satisfaction of performance obligations, and significant payment terms
InstrumentsFor instruments that include installation, and if the installation meets the criteria to be considered a separate performance obligation, product revenue is generally recognized upon delivery or when title has transferred to the customer, which is generally the point in time where control of the products has been transferred to customers, and installation revenue is recognized when the installation is complete. Certain of the Company's products require specialized installation and configuration at the customer's site. Revenue for these products is deferred until installation is complete and customer acceptance has been received. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 to 60 days.
Consumables and reagentsThe Company recognizes revenue from the sale of consumables and reagents upon delivery or when title has transferred to the customer, which is generally the point in time where control of the products has been transferred to customers. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 days.
SolutionsWhen the Company sells the instrument and reagents that work only on those instruments to a customer or distributor, the Company considers the instrument and reagents as separate performance obligations. The Company recognizes revenue when an instrument is sold to the customer upon delivery or when title has transferred to the customer, which is generally the point in time where control of the products has been transferred to customers. Revenue from the sale of reagents is also recognized at the time of delivery or when title has transferred to the customer. Payment terms for instrument and reagent sales are usually net 30 days from invoice date. When the Company places the instrument at the customer's site and sells the reagents to a customer, the instrument and reagents are accounted for together as one performance obligation. The Company does not charge a fee for the use of the instrument and retains ownership of the placed instrument. The Company has a right to remove the instrument and replace it with another instrument at the customer's site at any time throughout the contract term. The Company recognizes revenue upon delivery of reagents, which is the point in time where the Company has performed its obligation to provide a screening solution to the customer. Payment terms are usually net 30 days from invoice date. Payment terms for certain contracts are based on equal installments over the duration of the contract.
Extended warrantyThe Company recognizes revenue for extended warranties on a straight-line basis over the extended warranty period in service revenue. In the majority of countries in which the Company operates, the customary warranty period is one year and the extended warranty covers periods beyond year one. Customers typically pay for extended warranties on an annual basis over the term of the warranty. In general, customers can cancel the extended warranty at any time with 30 days notice without significant penalty.
ServicesThe Company's service offerings include cord blood processing and storage, and training. The Company recognizes revenue for the cord blood processing and training as the services are performed in service revenue. Revenue for the storage contracts are recognized over the contract period. Storage is typically for a period of 1, 20, or 25 years or lifetime. Lifetime storage is recognized over a certain period that is based on the life expectancy estimate from Social Security data. For cord blood processing, customers pay the processing fee in full at the point of sale. The processing fee is non-refundable unless the cord blood is non-viable for storage. For storage, customers are required to pay the storage fees in full upfront. Storage fees are refundable to the customer on a pro-rated basis if the contract is canceled.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Disaggregation of revenue

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

Reportable Segments
For the fiscal year ended
December 30, 2018
Discovery & Analytical SolutionsDiagnosticsTotal
(In thousands)
Primary geographical markets
Americas$680,117$385,005$1,065,122
Europe494,707283,385778,092
Asia518,387416,395934,782
$1,693,211$1,084,785$2,777,996
Primary end-markets
Diagnostics$—$1,084,785$1,084,785
Life sciences934,690—934,690
Applied markets758,521—758,521
$1,693,211$1,084,785$2,777,996
Timing of revenue recognition
Products and services transferred at a point in time$1,199,255$1,002,788$2,202,043
Services transferred over time493,95681,997575,953
$1,693,211$1,084,785$2,777,996

Contract Balances

Contract assets: The unbilled receivables (contract assets) primarily relate to the Company's right to consideration for work completed but not billed at the reporting date. The unbilled receivables are transferred to trade receivables when billed to customers. Contract assets are generally classified as current assets and are included in "Accounts receivable, net" in the consolidated balance sheet. The balance of contract assets as of December 30, 2018 and as of the date of adoption of ASC 606 were $31.9 million and $22.7 million, respectively. The amount of unbilled receivables recognized at the beginning of the period that were transferred to trade receivables during the fiscal year ended December 30, 2018 was $21.9 million. The increase in unbilled receivables during the fiscal year ended December 30, 2018 as a result of recognition of revenue before billing to customers, excluding amounts transferred to trade receivables during the period, amounted to $31.1 million.

Contract liabilities: The contract liabilities primarily relate to the advance consideration received from customers for products and related installation for which transfer of control has not occurred at the balance sheet date. Contract liabilities are classified as either current in "Accounts payable" or long-term in "Long-term liabilities" in the consolidated balance sheet based on the timing of when the Company expects to recognize revenue. The balance of contract liabilities as of December 30, 2018 and as of the date of adoption of ASC 606 were $30.8 million and $29.0 million, respectively. The increase in contract liabilities during the fiscal year ended December 30, 2018 due to cash received, excluding amounts recognized as revenue during the period, was $23.6 million. The amount of revenue recognized during the fiscal year ended December 30, 2018 that was included in the contract liability balance at the beginning of the period was $21.8 million.

Contract costs: The Company recognizes the incremental costs of obtaining a contract with a customer as an asset if it expects the benefit of those costs to be longer than one year. The Company determined that certain sales incentive programs meet the requirements to be capitalized. Total capitalized costs to obtain a contract were immaterial during the period and are included in other current and long-term assets on the consolidated balance sheet. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. These costs include the Company's internal sales force compensation program, as the Company determined that annual compensation is commensurate with annual sales activities.

Transaction price allocated to the remaining performance obligations

The Company applies the practical expedient in ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The estimated revenue expected to be

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

recognized beyond one year in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the period are not material to the Company. The remaining performance obligations primarily include noncancelable purchase orders and noncancelable software subscriptions and cloud service contracts.

Note 3: Changes in Accounting Policies

Except for the changes described below, the Company has consistently applied the accounting policies to all periods presented in these consolidated financial statements.

The Company adopted ASC 606 with a date of the initial application of January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below.

The Company applied ASC 606 using the modified retrospective method only to contracts that are not completed contracts as of January 1, 2018, and the cumulative effect of initially applying ASC 606 is recognized as an adjustment to the beginning retained earnings. Therefore, the comparative information has not been adjusted and continues to be reported under ASC 605. The details of the significant changes and quantitative impact of the changes are disclosed below.

A. Sales of software subscriptions or sales of licenses and maintenance in bundled arrangements

The Company previously recognized revenue from software licenses sold together with maintenance and/or consulting services upon shipment using the residual method, provided that the undelivered items in the arrangement have value to the customer on a stand-alone basis and vendor-specific objective evidence ("VSOE") of fair value can be determined. If VSOE of fair value for the undelivered elements cannot be established, the Company deferred 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 undelivered element is maintenance, then the Company recognized the entire fee ratably over the maintenance period. Under ASC 606, the total consideration in the contract is allocated to all products and services based on their stand-alone selling prices. The stand-alone selling prices are determined based on the list prices at which the Company sells the software license, software subscription, maintenance and/or consulting services. Accordingly, the Company now recognizes higher license revenue upfront and less service revenue over time.

B. Sales of instruments

The Company previously recognized revenue from sale of instruments when persuasive evidence of an arrangement existed, delivery had occurred, the price to the buyer was fixed or determinable, and collectability was reasonably assured. For certain sales of instruments that included customer-specified acceptance criteria, the Company previously recognized revenue after the acceptance criteria had been met. Under ASC 606, revenue is recognized when the Company satisfies a performance obligation by transferring control of the product to a customer. Accordingly, the Company now recognizes product revenue upon delivery or when title has transferred to the customer, as the Company believes acceptance is perfunctory.

C. Sales commissions

The Company previously recognized commission fees related to sales of products and services as selling expenses when they were incurred. Under ASC 606, the Company capitalizes those commission fees as costs of obtaining a contract, when they are incremental and, if they are expected to be recovered, the Company amortizes them consistently with the pattern of transfer of the product or service to which the asset relates. If the expected amortization period is one year or less, the commission fee is expensed when incurred.

D. Impacts on financial statements

The following tables summarize the impacts of ASC 606 adoption on the Company's consolidated financial statements for the fiscal year ended December 30, 2018.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Consolidated Balance Sheet

As reportedAdjustmentsBalances without adoption of ASC 606
(In thousands)
Cash and cash equivalents$163,111$—$163,111
Accounts receivable, net632,669(16,264)616,405
Inventories338,3479,773348,120
Other current assets100,507(363)100,144
Property, plant and equipment, net318,590—318,590
Intangible assets, net1,199,667—1,199,667
Goodwill2,952,608—2,952,608
Other assets, net270,023—270,023
Total assets$5,975,522$(6,854)$5,968,668
Current portion of long-term debt$14,856$—$14,856
Accounts payable220,949—220,949
Accrued restructuring and contract termination charges4,834—4,834
Accrued expenses and other current liabilities528,82719,173548,000
Current liabilities of discontinued operations2,165—2,165
Long-term debt1,876,624—1,876,624
Long-term liabilities742,312—742,312
Total liabilities3,390,56719,1733,409,740
Commitments and contingencies
Preferred stock———
Common stock110,597—110,597
Capital in excess of par value48,772—48,772
Retained earnings2,602,067(26,027)2,576,040
Accumulated other comprehensive loss(176,481)—(176,481)
Total stockholders’ equity2,584,955(26,027)2,558,928
Total liabilities and stockholders’ equity$5,975,522$(6,854)$5,968,668

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Consolidated Statement of Operations

As reportedAdjustmentsBalances without adoption of ASC 606
(In thousands)
Product revenue$1,935,493$(31,441)$1,904,052
Service revenue842,503—842,503
Total revenue2,777,996(31,441)2,746,555
Cost of product revenue908,228(10,290)897,938
Cost of service revenue528,829—528,829
Total cost of revenue1,437,057(10,290)1,426,767
Selling, general and administrative expenses811,913329812,242
Research and development expenses193,998—193,998
Restructuring and contract termination charges, net11,144—11,144
Operating income from continuing operations323,884(21,480)302,404
Interest and other expense, net66,201—66,201
Income from continuing operations before income taxes257,683(21,480)236,203
Provision for income taxes20,208(5,662)14,546
Income from continuing operations237,475(15,818)221,657
Income from discontinued operations before income taxes———
Loss on disposition of discontinued operations before income taxes(859)—(859)
Benefit from income taxes on discontinued operations and dispositions(1,311)—(1,311)
Gain from discontinued operations and dispositions452—452
Net income$237,927$(15,818)$222,109

The adoption of ASC 606 increased comprehensive income by $15.8 million in the Company's consolidated statement of comprehensive income for the fiscal year ended December 30, 2018. The adoption of ASC 606 had no impact on cash from or used in operating, investing, or financing activities in the Company's consolidated statement of cash flows as of and for the fiscal year ended December 30, 2018.

Note 4: Business Combinations

Acquisitions in fiscal year 2018

During fiscal year 2018, the Company completed the acquisition of four businesses for aggregate consideration of $106.0 million. The excess of the purchase price over the fair value of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforces acquired, and has been allocated to goodwill, which is not tax deductible. The Company has reported the operations for these acquisitions within the results of the Company's Diagnostics and Discovery & Analytical Solutions segments from the acquisition dates. Identifiable definite-lived intangible assets, such as core technology, trade names and customer relationships, acquired as part of these acquisitions had a weighted average amortization period of 11.2 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The total purchase price for the acquisitions in fiscal year 2018 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:

2018 Acquisitions
(In thousands)
Fair value of business combination:
Cash payments$95,950
Other liability3,354
Contingent consideration6,200
Working capital and other adjustments520
Less: cash acquired(1,132)
Total$104,892
Identifiable assets acquired and liabilities assumed:
Current assets$6,522
Property, plant and equipment1,166
Other assets891
Identifiable intangible assets:
Core technology34,021
Trade names1,070
Customer relationships10,200
Goodwill59,647
Deferred taxes(3,860)
Debt assumed(461)
Liabilities assumed(4,304)
Total$104,892

Acquisitions in fiscal year 2017

Acquisition of EUROIMMUN Medizinische Labordiagnostika AG. During fiscal year 2017, the Company completed the acquisition of 99.98% of the outstanding stock of EUROIMMUN Medizinische Labordiagnostika AG (“EUROIMMUN”) for aggregate consideration of €1.2 billion (equivalent to $1.4 billion at December 19, 2017, the time of closing). The purchase price was funded by borrowings from the Company's senior unsecured revolving credit facility and senior unsecured term loan credit facility of $710.0 million and $200.0 million, respectively, and available cash on hand of $503.1 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. As a result of the acquisition, the Company recorded goodwill of $591.3 million, which is not tax deductible, and intangible assets of $907.4 million. The Company has reported the operations for this acquisition within the results of the Company's Diagnostics segment from the acquisition date. Identifiable definite-lived intangible assets, such as core technology, trade names and customer relationships, acquired as part of this acquisition had a weighted average amortization period of 16.1 years.

Other acquisitions in 2017. During fiscal year 2017, the Company also completed the acquisition of two other businesses for aggregate consideration of $142.0 million. The acquired businesses were Tulip Diagnostics Private Limited (“Tulip”), which was acquired for total consideration of $127.3 million in cash and one other business acquired for total consideration of $14.7 million in cash. At the acquisition date, the Company had a potential obligation to pay the former shareholders of Tulip up to INR1.6 billion in additional consideration over a two year period, equivalent to $25.2 million, and is accounted for as compensation expense in the Company's financial statements over a two year period and is excluded from the purchase price allocation shown below. The excess of the purchase prices over the fair values of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforces acquired, and has been allocated to goodwill, which is not tax deductible. The Company has reported the operations of Tulip within the results of the Company's Diagnostics segment and the other acquired business within the results of the Company's Discovery & Analytical Solutions segment from the acquisition date. Identifiable definite-lived intangible assets,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

such as core technology, trade names and customer relationships, acquired as part of these acquisitions had a weighted average amortization period of 11.8 years.

During fiscal year 2018, the Company paid the former shareholders of Tulip a portion of the additional consideration amounting to INR716.3 million (equivalent to $11.3 million). As of December 30, 2018, the Company may have to pay the former shareholders of Tulip additional consideration of up to INR803.6 million (currently equivalent to $11.4 million) in the first quarter of fiscal year 2019.

The total purchase price for the acquisitions in fiscal year 2017 have been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:

EUROIMMUN2017 Other
(In thousands)
Fair value of business combination:
Cash payments$1,413,113$140,861
Other liability—1,273
Working capital and other adjustments—(93)
Less: cash acquired(25,018)(2,439)
Total$1,388,095$139,602
Identifiable assets acquired and liabilities assumed:
Current assets$121,174$16,268
Property, plant and equipment109,85911,356
Other assets71,6211,691
Identifiable intangible assets:
Core technology160,00012,400
Trade names36,0003,000
Customer relationships710,00043,700
In-process research and development ("IPR&D")1,400—
Goodwill591,30475,250
Deferred taxes(251,886)(15,735)
Liabilities assumed(100,020)(8,328)
Debt assumed(61,357)—
Total$1,388,095$139,602

EUROIMMUN's revenue and net loss for the period from the acquisition date to December 31, 2017 were $13.5 million and $1.0 million, respectively. The following unaudited pro forma information presents the combined financial results for the Company and EUROIMMUN as if the acquisition of EUROIMMUN had been completed at the beginning of fiscal year 2016:

December 31, 2017January 1, 2017
(In thousands, except per share data)
Pro Forma Statement of Operations Information (Unaudited):
Revenue$2,562,580$2,379,176
Income from continuing operations143,459156,210
Basic earnings per share:
Income from continuing operations$1.31$1.43
Diluted earnings per share:
Income from continuing operations$1.29$1.42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The unaudited pro forma information for fiscal years 2017 and 2016 have been calculated after applying the Company's accounting policies and the impact of acquisition date fair value adjustments. The fiscal year 2017 unaudited pro forma income from continuing operations was adjusted to exclude approximately $9.8 million of acquisition-related transaction costs. The fiscal year 2016 pro forma income from continuing operations was adjusted to include these acquisition-related transaction costs and the nonrecurring expenses related to the fair value adjustments. These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments, such as fair value adjustment to inventory, increased interest expense on debt obtained to finance the transaction, and increased amortization for the fair value of acquired intangible assets.

The pro forma information does not reflect the effect of costs or synergies that would have been expected to result from the integration of the acquisition. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the combination occurred at the beginning of each period presented, or of future results of the consolidated entities.

Acquisitions in fiscal year 2016

During fiscal year 2016, the Company completed the acquisition of two businesses for total consideration of $72.3 million in cash. The acquired businesses were Bioo Scientific Corporation, which was acquired for total consideration of $63.5 million in cash and one other business acquired for total consideration of $8.8 million in cash. The excess of the purchase prices over the fair values 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 workforces acquired. As a result of the acquisitions, the Company recorded goodwill of $43.1 million, which is not tax deductible, and intangible assets of $22.1 million. The Company has reported the operations for these acquisitions within the results of the Company's Diagnostics and Discovery & Analytical Solutions segments from the acquisition dates. Identifiable definite-lived intangible assets, such as core technology, trade names and customer relationships, acquired as part of these acquisitions had a weighted average amortization period of 9.4 years.

The total purchase price for the acquisitions in fiscal year 2016 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:

2016 Acquisitions
(In thousands)
Fair value of business combination:
Cash payments$72,497
Working capital and other adjustments(261)
Less: cash acquired(2,152)
Total$70,084
Identifiable assets acquired and liabilities assumed:
Current assets$7,153
Property, plant and equipment7,542
Identifiable intangible assets:
Core technology6,600
Trade names570
Customer relationships14,900
Goodwill43,072
Deferred taxes(7,768)
Liabilities assumed(1,985)
Total$70,084

The Company does not consider the acquisitions completed during fiscal years 2018, 2017 and 2016, with the exception of the EUROIMMUN acquisition, to be material to its consolidated results of operations; therefore, the Company is only presenting pro forma financial information of operations for the EUROIMMUN acquisition. The aggregate revenue and the results of operations for the acquisitions completed during fiscal year 2018 for the period from their acquisition dates to

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 30, 2018 were not material. The aggregate revenue for the acquisitions, with the exception of EUROIMMUN, completed during fiscal year 2017 for the period from their acquisition dates to December 31, 2017 was $38.5 million and the results of operations were not material. The aggregate revenue and results of operations for the acquisitions completed during fiscal year 2016 for the period from their respective acquisition dates to January 1, 2017 were minimal. 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 30, 2018, the allocations of purchase prices for acquisitions completed in fiscal years 2017 and 2016 were final. The preliminary allocations of the purchase prices for acquisitions completed in fiscal year 2018 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. These adjustments will be made in the periods in which the amounts are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition dates. All changes that do not qualify as adjustments made during the measurement periods are also included in current period earnings.

During fiscal year 2018, the Company obtained information relevant to determining the fair values of certain tangible and intangible assets acquired, and liabilities assumed, related to recent acquisitions and adjusted its purchase price allocations. Based on this information, for the EUROIMMUN acquisition, the Company recognized an increase in intangible assets of $10.0 million, an increase in other assets of $21.7 million, an increase in liabilities assumed of $12.3 million, a decrease in property and equipment of $20.1 million, a decrease in deferred tax liabilities of $23.6 million, and a decrease in goodwill of $23.5 million.

Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and are subject to adjustment upon finalization of the purchase price allocations. The accounting for business combinations requires estimates and judgments as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair values for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. Contingent consideration is measured at fair value at the acquisition date, based on the probability that revenue thresholds or product development milestones will be achieved during the earnout period, with changes in the fair value after the acquisition date affecting earnings to the extent it is to be settled in cash. Increases or decreases in the fair value of contingent consideration liabilities primarily result from changes in the estimated probabilities of achieving revenue thresholds or product development milestones during the earnout period.

As of December 30, 2018, the Company may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $76.5 million. As of December 30, 2018, the Company has recorded contingent consideration obligations of $69.7 million, of which $67.0 million was recorded in accrued expenses and other current liabilities, and $2.7 million was recorded in long-term liabilities. As of December 31, 2017, the Company has recorded contingent consideration obligations of $65.3 million, of which $52.2 million was recorded in accrued expenses and other current liabilities, and $13.1 million was recorded in long-term liabilities. The expected maximum earnout period for acquisitions with open contingency periods does not exceed 1.78 years from December 30, 2018, and the remaining weighted average expected earnout period at December 30, 2018 was 5 months. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the consolidated financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of definite-lived intangible assets or the recognition of additional contingent consideration which would be recognized as a component of operating expenses from continuing operations.

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 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 acquisition and divestiture-related costs (income) for fiscal years 2018, 2017 and 2016 were $15.8 million, $(8.5) million and $1.2 million, respectively. These amounts include $6.9 million of compensation expense and $0.7 million of net foreign exchange gain related to the foreign currency denominated stay bonus associated with the Tulip acquisition for fiscal year 2018 and $35.6 million of net foreign exchange gain related to the foreign currency forward contracts associated with the acquisition of EUROIMMUN and $14.9 million of compensation expense associated with the Tulip acquisition for fiscal year 2017. The acquisition-related interest expense amounted to $0.7 million and $0.3 million in fiscal years 2018 and 2017, respectively. These acquisition and divestiture-related costs were expensed as incurred and recorded in selling, general and administrative expenses and interest and other (income) expense, net in the Company's consolidated statements of operations.

Note 5:Disposition of Businesses and Assets

As part of the Company’s continuing efforts to focus on higher growth opportunities, the Company has discontinued certain businesses. When the discontinued operations represented a strategic shift that will have a major effect on the Company's operations and financial statements, the Company has accounted for these businesses as discontinued operations and accordingly, has presented the results of operations and related cash flows as discontinued operations. Any business deemed to be a discontinued operation prior to the adoption of Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of An Entity, continues to be reported as a discontinued operation, and the results of operations and related cash flows are presented 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 30, 2018 and December 31, 2017.

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 30, 2018December 31, 2017January 1, 2017
(In thousands)
(Loss) gain on disposition of the Medical Imaging business$(793)$179,615$—
Gain on disposition of Technical Services business——1,753
Loss on disposition of Fluid Sciences Segment(66)—(1,134)
(Loss) gain on disposition of discontinued operations before income taxes$(859)$179,615$619

On May 1, 2017 (the "Closing Date"), the Company completed the sale of its Medical Imaging business to Varex Imaging Corporation ("Varex") pursuant to the terms of the Master Purchase and Sale Agreement, dated December 21, 2016 (the “Agreement”), by and between the Company and Varian Medical Systems, Inc. ("Varian") and the subsequent Assignment and Assumption Agreement, dated January 27, 2017, between Varian and Varex, pursuant to which Varian assigned its rights under the Agreement to Varex. On the Closing Date, the Company received consideration of approximately $277.4 million for the sale of the Medical Imaging business. During fiscal year 2017, the Company paid Varex $4.2 million to settle a post-closing working capital adjustment. During fiscal year 2017, the Company recorded a pre-tax gain of $179.6 million and income tax expense of $43.1 million related to the sale of the Medical Imaging business in discontinued operations and dispositions. The corresponding tax liability was recorded within the other tax liabilities in the consolidated balance sheet, and the Company expects to utilize tax attributes to minimize the tax liability. Following the closing, the Company provided certain customary transitional services during a period of up to 12 months. Commercial transactions between the parties following the closing of the transaction were not significant.

During the third quarter of fiscal year 2018, the Company completed the sale of substantially all of the assets and liabilities related to its multispectral imaging business for aggregate consideration of $37.3 million, recognizing a pre-tax gain of $13.0 million. The pre-tax gain is included in interest and other expense, net in the consolidated statement of operations. The multispectral imaging business was a component of the Company's DAS segment. The divestiture of the multispectral imaging business has not been classified as a discontinued operation in this Form 10-K because the disposition does not represent a strategic shift that will have a major effect on the Company's operations and financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During fiscal year 2017, the Company sold Suzhou PerkinElmer Medical Laboratory Co., Ltd. for aggregate consideration of $2.3 million, recognizing a pre-tax loss of $1.1 million. The pre-tax loss recognized in fiscal year 2017 is included in interest and other expense, net in the consolidated statement of operations. Suzhou PerkinElmer Medical Laboratory Co., Ltd. was a component of the Company's Diagnostics segment. The divestiture of Suzhou PerkinElmer Medical Laboratory Co., Ltd. has not been classified as a discontinued operation in this Form 10-K because the disposition does not represent a strategic shift that will have a major effect on the Company's operations and financial statements.

During fiscal year 2016, the Company sold PerkinElmer Labs, Inc. for cash consideration of $20.0 million, recognizing a pre-tax gain of $7.1 million. The sale generated a capital loss for tax purposes of $7.3 million, which resulted in an income tax benefit of $2.5 million that was recognized as a discrete benefit during the second quarter of 2016. During fiscal year 2017, the Company recognized an additional pre-tax gain of $1.1 million relating to the earn-out consideration received from the buyer. PerkinElmer Labs, Inc. was a component of the Company's Diagnostics segment. The pre-tax gain recognized in fiscal years 2017 and 2016 is included in interest and other expense, net in the consolidated statement of operations. The divestiture of PerkinElmer Labs, Inc. has not been classified as a discontinued operation in this Form 10-K because the disposition does not represent a strategic shift that will have a major effect on the Company's operations and financial statements.

In August 1999, the Company sold the assets of its Technical Service business. The Company recorded a pre-tax gain of $1.8 million in fiscal year 2016 for a contingency related to this business. This was recognized as a gain on disposition of discontinued operations before income taxes.

The summary pre-tax operating results of the discontinued operations were as follows during the three fiscal years ended:

December 30, 2018December 31, 2017January 1, 2017
(In thousands)
Revenue$—$44,343$146,217
Cost of revenue—32,93395,395
Selling, general and administrative expenses—5,86913,657
Research and development expenses—4,89114,368
Restructuring and contract termination charges, net——568
Income from discontinued operations before income taxes$—$650$22,229

The Company recorded a (benefit from) provision for income taxes of $(1.3) million, $44.5 million and $4.3 million on discontinued operations and dispositions in fiscal years 2018, 2017 and 2016, respectively.

Note 6: Restructuring and Contract Termination Charges, Net

The Company has undertaken a series of restructuring actions related to the impact of acquisitions and divestitures, the alignment of the Company's operations with its growth strategy, the integration of its business units and its productivity initiatives. The 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, as applicable, and are included as a component of income from continuing operations.

The Company implemented a restructuring plan in each of the first, third and fourth quarters of fiscal year 2018 consisting of workforce reductions principally intended to realign resources to emphasize growth initiatives (the "Q1 2018 Plan", "Q3 2018 Plan" and "Q4 2018 Plan", respectively). The Company implemented a restructuring plan in each of the fourth and third quarters of fiscal year 2017 consisting of workforce reductions principally intended to realign resources to emphasize growth initiatives (the "Q4 2017 Plan and "Q3 2017 Plan", respectively). The Company implemented a restructuring plan in the first quarter of fiscal year 2017 consisting of workforce reductions and the closure of excess facility space principally intended to focus resources on higher growth end markets (the "Q1 2017 Plan"). The Company implemented a restructuring plan in the third quarter of fiscal year 2016 consisting of workforce reductions principally intended to focus resources on higher growth product lines (the "Q3 2016 Plan"). The Company implemented a restructuring plan in the second quarter of fiscal year 2016 consisting of workforce reductions principally intended to focus resources on higher growth end markets (the "Q2 2016 Plan"). 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

resources into geographic regions and end markets that are more consistent with the Company's growth strategy (the "Previous Plans").

The following table summarizes the number of employees reduced, the initial restructuring or contract termination charges by operating segment, and the dates by which payments were substantially completed, or the expected dates by which payments will be substantially completed, for restructuring actions implemented during fiscal years 2018, 2017 and 2016 in continuing operations:

Workforce ReductionsClosure of Excess FacilityTotal(Expected) Date Payments Substantially Completed by
Headcount ReductionDiagnosticsDiscovery & Analytical SolutionsDiagnosticsDiscovery & Analytical SolutionsSeveranceExcess Facility
(In thousands, except headcount data)
Q4 2018 Plan1$—$348$—$—$348Q1 FY2019—
Q3 2018 Plan616181,146——1,764Q2 FY2019—
Q1 2018 Plan479025,096——5,998Q2 FY2019—
Q4 2017 Plan292551,680——1,935Q1 FY2019—
Q3 2017 Plan271,0211,321——2,342Q4 FY2018—
Q1 2017 Plan901,6315,00033336,697Q2 FY2018Q2 FY2018
Q3 2016 Plan22411,779——1,820Q4 FY2017—
Q2 2016 Plan725614,106——4,667Q3 FY2017—

The Company expects to make payments under the Previous Plans for remaining residual lease obligations, with terms varying in length, through fiscal year 2022.

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. The Company recorded additional pre-tax charges of $5.0 million, $3.6 million and $0.1 million in the Discovery & Analytical Solutions segment during fiscal years 2018, 2017 and 2016, respectively, and $0.5 million during fiscal year 2017 in the Diagnostics segment as a result of these contract terminations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At December 30, 2018, the Company had $6.2 million recorded for accrued restructuring and contract termination charges, of which $4.8 million was recorded in short-term accrued restructuring and $1.4 million was recorded in long-term liabilities. At December 31, 2017, the Company had $14.0 million recorded for accrued restructuring and contract termination charges, of which $8.8 million was recorded in short-term accrued restructuring, $2.3 million was recorded in long-term liabilities and $2.9 million was recorded in other reserves. The following table summarizes the Company's restructuring accrual balances and related activity by restructuring plan, as well as contract termination accrual balances and related activity, during fiscal years 2018, 2017 and 2016 in continuing operations:

Balance at January 3, 20162016 Charges and Changes in Estimates, Net2016 Amounts PaidBalance at January 1, 20172017 Charges and Changes in Estimates, Net2017 Amounts PaidBalance at December 31, 20172018 Charges and Changes in Estimates, Net2018 Amounts PaidBalance at December 30, 2018
(In thousands)
Severance:
Q4 2018 Plan$—$—$—$—$—$—$—$348$—$348
Q3 2018 Plan———————2,054(639)1,415
Q1 2018 Plan———————5,998(4,389)1,609
Q4 2017 Plan(1)————1,935(16)1,919(381)(1,538)—
Q3 2017 Plan(2)————2,342(270)2,072(1,204)(868)—
Q1 2017 Plan(3)————6,631(4,133)2,498(983)(1,232)283
Q3 2016 Plan—1,820(612)1,208(202)(1,006)————
Q2 2016 Plan—4,667(3,231)1,436(829)(607)—232(156)76
Facility:
Q1 2017 Plan————66(33)33—(33)—
Previous Plans22,018(1,451)(12,787)7,780(537)(2,844)4,399338(2,425)2,312
Restructuring22,0185,036(16,630)10,4249,406(8,909)10,9216,402(11,280)6,043
Contract Termination13288(103)1173,251(320)3,0484,742(7,653)137
Total Restructuring and Contract Termination$22,150$5,124$(16,733)$10,541$12,657$(9,229)$13,969$11,144$(18,933)$6,180
(1)During fiscal year 2018, the Company recognized pre-tax restructuring reversals of $0.2 million each in the Discovery & Analytical Solutions and Diagnostics segments, related to lower than expected costs associated with workforce reductions for the Q4 2017 Plan.
(2)During fiscal year 2018, the Company recognized pre-tax restructuring reversals of $0.8 million in the Discovery & Analytical Solutions segment and $0.4 million in the Diagnostics segment, related to lower than expected costs associated with workforce reductions for the Q3 2017 Plan.
(3)During fiscal year 2018, the Company recognized pre-tax restructuring reversals of $1.0 million in the Discovery & Analytical Solutions segment, related to lower than expected costs associated with workforce reductions for the Q1 2017 Plan.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 7:Interest and Other Expense, Net

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

December 30, 2018December 31, 2017January 1, 2017
Interest income$(1,141)$(2,571)$(702)
Interest expense66,97643,94041,528
(Gain) loss on disposition of businesses and assets, net (see Note 5)(12,844)309(5,562)
Other expense (income), net13,210(42,781)15,250
Total interest and other expense, net$66,201$(1,103)$50,514

Foreign currency transaction gains were $9.4 million, $29.2 million and $1.5 million in fiscal years 2018, 2017 and 2016, respectively. Net losses (gains) from forward currency hedge contracts were $11.7 million, $(4.5) million and $5.4 million in fiscal years 2018, 2017 and 2016, respectively. The other components of net periodic pension cost (credit) were $11.5 million, $(9.2) million and $11.5 million in fiscal years 2018, 2017 and 2016 , respectively. These amounts were included in other expense (income), net.

Note 8: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 30, 2018December 31, 2017January 1, 2017
(In thousands)
Unrecognized tax benefits, beginning of year$30,308$29,607$28,143
Gross increases—tax positions in prior periods6,9317491,514
Gross decreases—tax positions in prior periods(1,622)(828)(183)
Gross increases—current-period tax positions—2,3463,547
Settlements(2,253)(324)—
Lapse of statute of limitations(181)(1,371)(4,109)
Foreign currency translation adjustments(174)129695
Unrecognized tax benefits, end of year$33,009$30,308$29,607

The Company classifies interest and penalties as a component of income tax expense. At December 30, 2018 and December 31, 2017, the Company had accrued interest and penalties of $2.5 million and $1.9 million, respectively. During fiscal years 2018, 2017 and 2016, the Company recognized a net expense (benefit) of $0.4 million, $(0.3) million and $(0.1) million, respectively, for interest and penalties in its total tax provision primarily due to settlements and statutes of limitations that had lapsed. At December 30, 2018, the Company had gross tax effected unrecognized tax benefits of $33.0 million, of which $31.3 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 $2.3 million of its uncertain tax positions at December 30, 2018, including accrued interest and penalties, and net of tax benefits, may be resolved over the next twelve months as a result of lapses in applicable statutes of limitations and potential settlements. Various tax years after 2010 remain open to examination by certain jurisdictions in which the Company has significant business operations, such as 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)

On December 22, 2017, the President of the United States signed the Tax Act, which makes broad and complex changes to the U.S. Internal Revenue Code. Changes include, but are not limited to: (1) the lowering of the U.S. corporate tax rate from 35% to 21%; (2) the transition of U.S. international taxation from a worldwide tax system to a modified territorial system with a one-time transition tax on the deemed repatriation of cumulative foreign earnings as of December 31, 2017; (3) a new provision designed to tax global intangible low-taxed income (GILTI); (4) the creation of the base erosion anti-abuse tax (BEAT), which is effectively a new minimum tax; (5) the deduction for foreign-derived intangible income (FDII); (6) a new limitation on deductible interest expense; (7) the repeal of the domestic production activity deduction; and (8) limitations on the deductibility of certain executive compensation.

ASU 2018-05 was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The Company is applying the guidance in ASU 2018-05 (see Note 1, Basis of Presentation) when accounting for the enactment date effects of the Tax Act. The end of the measurement period for purposes of applying the provisions of ASU 2018-05 was December 22, 2018. As a result, the Company has completed the analysis based on legislative updates relating to the Tax Act currently available and has recorded the impact in tax expense from continuing operations as explained below.

Remeasurement: The Company remeasured its future tax benefits and liabilities at the enacted tax rate of 21% and provided a provisional amount of $21.5 million during fiscal year 2017. During the fiscal year ended December 30, 2018, the Company recognized a tax benefit of $0.3 million for the remeasurement of certain future tax liabilities and included these adjustments as a component of the provision for income tax from continuing operations.

One-Time Transition Tax: The Tax Act requires the Company to pay a one-time transition tax on the unremitted earnings of foreign subsidiaries. Based on available information, the Company estimated the tax on the deemed repatriation of foreign earnings and recorded a tax expense of $85.0 million in continuing operations at December 31, 2017. During the fiscal year ended December 30, 2018, the Company refined its calculations of the one-time transition tax based on newly issued guidance from the Internal Revenue Service and recorded a tax benefit of $4.6 million in continuing operations.

GILTI, FDII, and other provisions: For fiscal year beginning in 2018, the Company is subject to several provisions of the Tax Act including computations under GILTI, FDII, and other provisions. Management has made a reasonable estimate of the impact of each provision of the Tax Act on the Company's effective tax rate for the fiscal year ended December 30, 2018. Management will continue to refine the provisional estimates for the computations of the GILTI, FDII, and other provisions as additional clarification and implementation guidance becomes available. For the fiscal year ended December 30, 2018, the Company has decided to adopt the period cost method and has not recorded any potential deferred tax effects related to GILTI and FDII in the financial statements.

During fiscal year 2018, the Company recorded net discrete income tax benefit of $8.1 million, of which $2.0 million was a result of the enactment of the Tax Act, along with an additional discrete benefit of $7.2 million related to the recognition of excess tax benefits on stock compensation partially offset by $1.1 million expense related to other tax matters. During fiscal years 2017 and 2016, the Company recorded net discrete income tax expense of $98.6 million and income tax benefits of $9.6 million, respectively. The $98.6 million tax expense in fiscal year 2017 was primarily related to $106.5 million as a result of the Tax Act, partially offset by a discrete benefit of $5.1 million related to the recognition of excess tax benefits on stock compensation, while the $9.6 million of tax benefit in fiscal year 2016 was primarily related to the recognition of excess tax benefits on stock compensation, reversals of uncertain tax position reserves, and the resolution of other tax matters.

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

December 30, 2018December 31, 2017January 1, 2017
(In thousands)
U.S.$32,627$3,743$39,689
Non-U.S.225,056292,975204,379
Total$257,683$296,718$244,068

On a U.S. income tax basis, the Company has reported significant taxable income over the three year period ended December 30, 2018. The Company has utilized tax attributes to minimize cash taxes paid on that taxable income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The components of the provision for income taxes on continuing operations were as follows:

Current ExpenseDeferred Expense (Benefit)Total
(In thousands)
Fiscal year ended December 30, 2018
Federal$7,938$(5,250)$2,688
State2,3452,5724,917
Non-U.S.61,028(48,425)12,603
Total$71,311$(51,103)$20,208
Fiscal year ended December 31, 2017
Federal$62,003$35,435$97,438
State3,332(792)2,540
Non-U.S.45,639(5,789)39,850
Total$110,974$28,854$139,828
Fiscal year ended January 1, 2017
Federal$14$2,994$3,008
State2,143(575)1,568
Non-U.S.30,754(6,968)23,786
Total$32,911$(4,549)$28,362

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

December 30, 2018December 31, 2017January 1, 2017
(In thousands)
Continuing operations$20,208$139,828$28,362
Discontinued operations(1,311)44,5224,255
Total$18,897$184,350$32,617

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 30, 2018December 31, 2017January 1, 2017
(In thousands)
Tax at statutory rate$54,114$103,851$85,424
Non-U.S. rate differential, net(27,281)(65,836)(52,648)
U.S. taxation of multinational operations7,0475,4086,941
State income taxes, net2,0281,8101,509
Prior year tax matters(6,034)(7,955)(9,621)
Federal tax credits(3,738)(8,249)(7,189)
Change in valuation allowance(759)1,951(2,755)
Non-deductible acquisition expense——5,701
Impact of federal tax reform(2,025)106,538—
Others, net(3,144)2,3101,000
Total$20,208$139,828$28,362

The variation in the Company's effective tax rate for each year is primarily a result of the recognition of earnings in foreign jurisdictions, predominantly Singapore, Finland and the Netherlands, which are taxed at rates lower than the U.S. federal statutory rate, resulting in a benefit from income taxes of $18.7 million in fiscal year 2018, $55.9 million in fiscal year 2017 and $48.2 million in fiscal year 2016. These amounts include $10.3 million in fiscal year 2018, $10.1 million in fiscal

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

year 2017 and $11.4 million in fiscal year 2016 of benefits derived from tax holidays in China and Singapore. The effect of these benefits derived from tax holidays on basic and diluted earnings per share for fiscal year 2018 was $0.09 and $0.09, respectively, for fiscal year 2017 was $0.09 and $0.09, respectively, and for fiscal year 2016 was $0.10 and $0.10, respectively. The tax holiday in one of the Company's subsidiaries in China expired in 2017 and the tax holiday in one other subsidiary in China is scheduled to expire in fiscal year 2019. The tax holiday in one of the Company's subsidiaries in Singapore is scheduled to expire in fiscal year 2023.

The tax effects of temporary differences and attributes that gave rise to deferred income tax assets and liabilities as of December 30, 2018 and December 31, 2017 were as follows:

December 30, 2018December 31, 2017
(In thousands)
Deferred tax assets:
Inventory$—$6,376
Reserves and accruals39,48726,657
Accrued compensation21,70917,333
Net operating loss and credit carryforwards144,42188,503
Accrued pension31,14634,682
Restructuring reserve1,7802,586
Deferred revenue31,04528,478
Unrealized foreign exchange loss—10,910
Total deferred tax assets269,588215,525
Deferred tax liabilities:
Inventory(278)—
Postretirement health benefits(3,406)(3,391)
Depreciation and amortization(309,958)(392,293)
All other, net(1,879)(594)
Total deferred tax liabilities(315,521)(396,278)
Valuation allowance(102,087)(68,895)
Net deferred tax liabilities$(148,020)$(249,648)

The components of net deferred tax liabilities as of December 30, 2018 and December 31, 2017 were recognized in the consolidated balance sheets as follows:

December 30, 2018December 31, 2017
(In thousands)
Other assets, net$79,312$67,280
Long-term liabilities(227,332)(316,928)
Total$(148,020)$(249,648)

At December 30, 2018, for income tax return purposes, the Company had U.S. federal net operating loss carryforwards of $38.3 million, state net operating loss carryforwards of $200.6 million, foreign net operating loss carryforwards of $515.5 million, state tax credit carryforwards of $6.8 million, general business tax credit carryforwards of $10.9 million, and foreign tax credit carryforwards of $0.1 million. These are subject to expiration in years ranging from 2019 to 2038, and without expiration for certain foreign net operating loss carryforwards and certain state credit carryforwards.

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 increase in the valuation allowance of $33.2 million in fiscal year 2018 is primarily due to an increase in tax attributes that the Company does not expect to realize for one of its non-U.S. subsidiaries.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The components of net deferred tax (liabilities) assets as of December 30, 2018 and December 31, 2017 were as follows:

December 30, 2018December 31, 2017
(In thousands)
U.S.$52,469$44,974
Non-U.S.(200,489)(294,622)
Total$(148,020)$(249,648)

Historically, deferred income tax expense has not been provided on the cumulative undistributed earnings of the Company's international subsidiaries. During fiscal year 2018, the Company has determined that previously undistributed earnings of certain international subsidiaries of $1.0 billion no longer met the requirements of indefinite reinvestment and therefore recognized $2.9 million of income tax expense in fiscal year 2018. The Company’s intent is to continue to reinvest the remaining undistributed earnings of its international subsidiaries indefinitely. While federal income tax expense has been recognized as a result of the Tax Act, the Company has not provided any additional deferred taxes with respect to items such as foreign withholding taxes, state income tax or foreign exchange gain or loss. In addition, no additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations. As of December 30, 2018, 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 additional incremental tax cost has been provided, other than the $80.4 million from the one-time transition tax on deemed repatriation, was approximately $652.1 million. It is not practicable for the Company to calculate the unrecognized deferred tax liability related to such incremental tax costs on those earnings.

Note 9: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 30, 2018December 31, 2017January 1, 2017
(In thousands)
Number of common shares—basic110,561109,857109,478
Effect of dilutive securities:
Stock options761708640
Restricted stock awards212294195
Number of common shares—diluted111,534110,859110,313
Number of potentially dilutive securities excluded from calculation due to antidilutive impact349287458

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 10:Accounts Receivable, Net

Accounts receivable were net of reserves for doubtful accounts of $30.6 million and $31.3 million as of December 30, 2018 and December 31, 2017, respectively.

Note 11:Inventories

Inventories as of December 30, 2018 and December 31, 2017 consisted of the following:

December 30, 2018December 31, 2017
(In thousands)
Raw materials$119,115$122,100
Work in progress18,11018,452
Finished goods201,122211,123
Total inventories$338,347$351,675
Note 12:Property, Plant and Equipment, Net

Property, plant and equipment as of December 30, 2018 and December 31, 2017, consisted of the following:

December 30, 2018December 31, 2017
(In thousands)
At cost:
Land$5,482$5,624
Building and leasehold improvements272,277262,657
Machinery and equipment402,424362,638
Total property, plant and equipment680,183630,919
Accumulated depreciation(361,593)(332,853)
Total property, plant and equipment, net$318,590$298,066

Depreciation expense on property, plant and equipment for the fiscal years ended December 30, 2018, December 31, 2017 and January 1, 2017 was $44.7 million, $31.3 million and $28.5 million, respectively.

Note 13:Marketable Securities and Investments

Investments as of December 30, 2018 and December 31, 2017 consisted of the following:

December 30, 2018December 31, 2017
(In thousands)
Marketable securities$2,447$2,208
Cost method investments16,78310,783
$19,230$12,991

Marketable securities. 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 (loss) in the statements of stockholders’ equity, were not material in fiscal years 2018 and 2017. 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 30, 2018 and December 31, 2017 consisted of the following:

Market ValueGross Unrealized Holding
CostGains(Losses)
(In thousands)
December 30, 2018
Equity securities$671$1,037$—$(366)
Fixed-income securities2222——
Other1,7541,817—(63)
$2,447$2,876$—$(429)
December 31, 2017
Equity securities$811$1,161$—$(350)
Fixed-income securities2222——
Other1,3751,438—(63)
$2,208$2,621$—$(413)

Cost method investments. The Company has equity interests in privately-held entities over which the Company neither has significant influence nor control and are accounted for using under the cost method. Under the cost method, the Company records the investment at cost and recognizes income for any dividends declared from distribution of investee’s earnings.

The Company’s investments consist of (i) investments carried at fair value, including available-for-sale securities, and (ii) investments accounted for using the cost method of accounting. The Company regularly reviews its investments for impairment, including when the carrying value of an investment exceeds its market value. If the Company determines that an investment has sustained an other-than-temporary decline in its value, the investment is written down to its fair value by a charge to earnings that is included in Impairment of long-term investments and other assets. Factors that are considered by the Company in determining whether an other-than-temporary decline in value has occurred include (i) the market value of the security in relation to its cost basis, (ii) the financial condition of the investee, and (iii) the Company’s intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.

For investments accounted for using the cost method of accounting, the Company evaluates information available (e.g., budgets, business plans, financial statements, etc.) in addition to quoted market prices, if any, in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include recurring operating losses, credit defaults and subsequent rounds of financing at an amount below the cost basis of the Company’s investment.

Note 14: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 the comparison of the fair value to the carrying value of the reporting unit to determine if the carrying value exceeds the fair value. If the carrying value of the reporting unit exceeds its fair value, an impairment loss in an amount equal to that excess is recognized up to the amount of goodwill. The Company performed its annual impairment testing for its reporting units as of January 1, 2018, its annual impairment date for fiscal year 2018.

Non-amortizing intangibles are also subject to an annual impairment test. The Company consistently employed the relief from royalty model to estimate the current fair value when testing for impairment of non-amortizing intangible asset. 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 up to the amount of the amortizing intangible asset. In addition, the Company evaluates the remaining useful life of our non-amortizing intangible asset at least annually to determine whether events or circumstances continue to support an indefinite useful life. If events or circumstances indicate that the useful life of our non-amortizing intangible asset is no longer indefinite, the asset will be tested for impairment. This intangible asset will then be amortized prospectively over its estimated remaining useful life and accounted for in the same manner as other intangible assets that are subject to amortization.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The changes in the carrying amount of goodwill for fiscal years 2018 and 2017 are as follows:

Discovery & Analytical SolutionsDiagnosticsConsolidated
Balance at January 1, 2017$1,303,936$944,030$2,247,966
Foreign currency translation37,64629,09166,737
Acquisitions, earnouts and other2,653684,842687,495
Balance at December 31, 20171,344,2351,657,9633,002,198
Foreign currency translation(32,189)(35,289)(67,478)
Acquisitions, earnouts and other22,946(5,058)17,888
Balance at December 30, 2018$1,334,992$1,617,616$2,952,608

Identifiable intangible asset balances at December 30, 2018 by category and by business segment were as follows:

Discovery & Analytical SolutionsDiagnosticsConsolidated
Patents$28,030$14,616$42,646
Less: Accumulated amortization(25,978)(11,775)(37,753)
Net patents2,0522,8414,893
Trade names and trademarks29,81148,33578,146
Less: Accumulated amortization(21,728)(12,073)(33,801)
Net trade names and trademarks8,08336,26244,345
Licenses50,1783,12753,305
Less: Accumulated amortization(44,376)(1,174)(45,550)
Net licenses5,8021,9537,755
Core technology240,734300,177540,911
Less: Accumulated amortization(189,033)(76,711)(265,744)
Net core technology51,701223,466275,167
Customer relationships222,892866,6351,089,527
Less: Accumulated amortization(128,142)(165,822)(293,964)
Net customer relationships94,750700,813795,563
IPR&D—1,3601,360
Net amortizable intangible assets162,388966,6951,129,083
Non-amortizing intangible asset:
Trade name70,584—70,584
Total$232,972$966,695$1,199,667

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Identifiable intangible asset balances at December 31, 2017 by category and business segment were as follows:

Discovery & Analytical SolutionsDiagnosticsConsolidated
Patents$28,048$11,911$39,959
Less: Accumulated amortization(24,448)(10,637)(35,085)
Net patents3,6001,2744,874
Trade names and trademarks29,95051,02480,974
Less: Accumulated amortization(20,022)(8,228)(28,250)
Net trade names and trademarks9,92842,79652,724
Licenses43,06110,23953,300
Less: Accumulated amortization(34,620)(8,015)(42,635)
Net licenses8,4412,22410,665
Core technology236,324243,435479,759
Less: Accumulated amortization(190,423)(59,920)(250,343)
Net core technology45,901183,515229,416
Customer relationships233,573907,9381,141,511
Less: Accumulated amortization(116,696)(126,144)(242,840)
Net customer relationships116,877781,794898,671
IPR&D—80,00680,006
Net amortizable intangible assets184,7471,091,6091,276,356
Non-amortizing intangible asset:
Trade name70,584—70,584
Total$255,331$1,091,609$1,346,940

Total amortization expense related to definite-lived intangible assets was $135.9 million in fiscal year 2018, $73.7 million in fiscal year 2017 and $71.5 million in fiscal year 2016. Estimated amortization expense related to definite-lived intangible assets for each of the next five years is $149.7 million in fiscal year 2019, $152.0 million in fiscal year 2020, $136.7 million in fiscal year 2021, $126.6 million in fiscal year 2022, and $109.1 million in fiscal year 2023.

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. During fiscal year 2016, the Company extended the existing agreement for an additional 3 years and expanded the distribution rights to the related markets. During fiscal year 2016, the Company paid $6.0 million for prepaid royalties related to the extension and new agreement. During the fiscal years 2017 and 2016, the Company paid $5.1 million and $9.4 million, respectively, for additional prepaid royalties. As of December 30, 2018, the Company recorded prepaid royalties of $65.0 million, of which $5.6 million was recorded in other current assets, and $59.4 million was recorded in other assets. 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 Discovery & Analytical Solutions segment from the execution date.

Note 15:Debt

Senior Unsecured Revolving Credit Facility. The Company's senior unsecured revolving credit facility provides for $1.0 billion of revolving loans and has an initial maturity of August 11, 2021. As of December 30, 2018, undrawn letters of credit in the aggregate amount of $11.4 million were treated as issued and outstanding when calculating the borrowing availability under the senior unsecured revolving credit facility. As of December 30, 2018, the Company had $570.6 million available for additional borrowing under the facility. The Company uses the senior unsecured revolving credit facility for general corporate

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

purposes, which may include working capital, refinancing existing indebtedness, capital expenditures, share repurchases, acquisitions and strategic alliances. The interest rates under the senior unsecured revolving credit facility are based on the Eurocurrency rate or the base rate at the time of borrowing, plus a margin. The base rate is the higher of (i) the rate of interest in effect for such day as publicly announced from time to time by JP Morgan Chase Bank, N.A. as its "prime rate," (ii) the Federal Funds rate plus 50 basis points or (iii) an adjusted one-month Libor plus 1.00%. The Eurocurrency margin as of December 30, 2018 was 110 basis points. The weighted average Eurocurrency interest rate as of December 30, 2018 was 2.51%, resulting in a weighted average effective Eurocurrency rate, including the margin, of 3.61%, which was the interest applicable to the borrowings outstanding under the Eurocurrency rate as of December 30, 2018. As of December 30, 2018, the senior unsecured revolving credit facility had outstanding borrowings of $418.0 million, and $2.4 million of unamortized debt issuance costs. As of December 31, 2017, the senior unsecured revolving credit facility had $625.0 million outstanding borrowings, and $3.3 million of unamortized debt issuance costs. The credit agreement for the facility contains affirmative, negative and financial covenants and events of default. The financial covenants include a debt-to-capital ratio that remains applicable for so long as the Company's debt is rated as investment grade. In the event that the Company's debt is not rated as investment grade, the debt-to-capital ratio covenant is replaced with a maximum consolidated leverage ratio covenant and a minimum consolidated interest coverage ratio covenant.

Senior Unsecured Term Loan Credit Facility. The Company entered into a senior unsecured term loan credit facility on August 11, 2017 that provided for $200.0 million of term loans and had an initial maturity of twelve months from December 19, 2017, the date of the initial draw. The Company utilized the senior unsecured term loan facility for the acquisition of EUROIMMUN. The interest rates under the senior unsecured term loan credit facility were based on the Eurocurrency rate or the base rate at the time of the borrowing, plus a margin. The base rate was the higher of (i) the rate of interest in effect for such day as publicly announced from time to time by JP Morgan Chase Bank, N.A. as its "prime rate," (ii) the Federal Funds rate plus 50 basis points or (iii) an adjusted one-month Libor plus 1.00%. In April 2018, the Company paid in full the outstanding balance of $200.0 million on the Company’s senior unsecured term loan credit facility, from the proceeds of the 0.6% senior unsecured notes due in 2021 that were issued in April 2018.

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 (the “November 2021 Notes”) in a registered public offering and received $493.6 million of net proceeds from the issuance. The November 2021 Notes were issued at 99.4% of the principal amount, which resulted in a discount of $3.1 million. As of December 30, 2018, the November 2021 Notes had an aggregate carrying value of $497.4 million, net of $1.1 million of unamortized original issue discount and $1.6 million of unamortized debt issuance costs. As of December 31, 2017, the November 2021 Notes had an aggregate carrying value of $496.6 million, net of $1.4 million of unamortized original issue discount and $2.0 million of unamortized debt issuance costs. The November 2021 Notes mature in November 2021 and bear interest at an annual rate of 5%. Interest on the November 2021 Notes is payable semi-annually on May 15th and November 15th each year. Prior to August 15, 2021 (three months prior to their maturity date), the Company may redeem the November 2021 Notes in whole or in part, at its option, at a redemption price equal to the greater of (i) 100% of the principal amount of the November 2021 Notes to be redeemed, plus accrued and unpaid interest, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest in respect to the November 2021 Notes being redeemed, discounted on a semi-annual basis, at the Treasury Rate plus 45 basis points, plus accrued and unpaid interest. At any time on or after August 15, 2021 (three months prior to their maturity date), the Company may redeem the November 2021 Notes, at its option, at a redemption price equal to 100% of the principal amount of the November 2021 Notes to be redeemed plus accrued and unpaid interest. Upon a change of control (as defined in the indenture governing the November 2021 Notes) and a contemporaneous downgrade of the November 2021 Notes below investment grade, each holder of November 2021 Notes will have the right to require the Company to repurchase such holder's November 2021 Notes for 101% of their principal amount, plus accrued and unpaid interest.

1.875% Senior Unsecured Notes due 2026. On July 19, 2016, the Company issued €500.0 million aggregate principal amount of senior unsecured notes due in 2026 (the “2026 Notes”) in a registered public offering and received approximately €492.3 million of net proceeds from the issuance. The 2026 Notes were issued at 99.118% of the principal amount, which resulted in a discount of €4.4 million. The 2026 Notes mature in July 2026 and bear interest at an annual rate of 1.875%. Interest on the 2026 Notes is payable annually on July 19th each year. The proceeds from the 2026 Notes were used to pay in full the outstanding balance of the Company's previous senior unsecured revolving credit facility. As of December 30, 2018, the 2026 Notes had an aggregate carrying value of $564.5 million, net of $4.0 million of unamortized original issue discount and $3.8 million of unamortized debt issuance costs. As of December 31, 2017, the 2026 Notes had an aggregate carrying value of $591.7 million, net of $4.7 million of unamortized original issue discount and $4.3 million of unamortized debt issuance costs.

Prior to April 19, 2026 (three months prior to their maturity date), the Company may redeem the 2026 Notes in whole at any time or in part from time to time, at its option, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2026 Notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest in respect to the 2026 Notes being redeemed, discounted on an annual basis, at the applicable Comparable

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Government Bond Rate (as defined in the indenture governing the 2026 Notes) plus 35 basis points; plus, in each case, accrued and unpaid interest. In addition, at any time on or after April 19, 2026 (three months prior to their maturity date), the Company may redeem the 2026 Notes, at its option, at a redemption price equal to 100% of the principal amount of the 2026 Notes due to be redeemed plus accrued and unpaid interest.

Upon a change of control (as defined in the indenture governing the 2026 Notes) and a contemporaneous downgrade of the 2026 Notes below investment grade, the Company will, in certain circumstances, make an offer to purchase the 2026 Notes at a price equal to 101% of their principal amount plus any accrued and unpaid interest.

0.6% Senior Unsecured Notes due in 2021. On April 11, 2018, the Company issued €300.0 million aggregate principal amount of senior unsecured notes due in 2021 (the “April 2021 Notes”) in a registered public offering and received approximately €298.7 million of net proceeds from the issuance. The April 2021 Notes were issued at 99.95% of the principal amount, which resulted in a discount of €0.2 million. As of December 30, 2018, the April 2021 Notes had an aggregate carrying value of $341.3 million, net of $0.1 million of unamortized original issue discount and $2.0 million of unamortized debt issuance costs. The April 2021 Notes mature in April 2021 and bear interest at an annual rate of 0.6%. Interest on the April 2021 Notes is payable annually on April 9th each year. The proceeds from the April 2021 Notes were used to pay in full the outstanding balance of the Company’s senior unsecured term loan credit facility, and a portion of the outstanding senior unsecured revolving credit facility, and in each case the borrowings were incurred to pay a portion of the purchase price for the Company's acquisition of EUROIMMUN, which closed on December 19, 2017. Prior to the maturity date of the April 2021 Notes, the Company may redeem them in whole at any time or in part from time to time, at its option, at a redemption price equal to the greater of (i) 100% of the principal amount of the April 2021 Notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest in respect to the April 2021 Notes being redeemed, discounted on an annual basis, at the applicable Comparable Government Bond Rate (as defined in the indenture governing the April 2021 Notes) plus 15 basis points; plus, in each case, accrued and unpaid interest. Upon a change of control (as defined in the indenture governing the April 2021 Notes) and a contemporaneous downgrade of the April 2021 Notes below investment grade, the Company will, in certain circumstances, make an offer to purchase the April 2021 Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest.

Other Debt Facilities. The Company's other debt facilities include Euro-denominated bank loans with an aggregate carrying value of $32.1 million (or €28.0 million) and $57.2 million (or €47.6 million) as of December 30, 2018 and December 31, 2017, respectively. These bank loans are primarily utilized for financing fixed assets and are repaid in monthly or quarterly installments with maturity dates extending to 2028. Of these bank loans, loans in the aggregate amount of $31.9 million bear fixed interest rates between 1.1% and 5.5% and a loan in the amount of $0.2 million bears a variable interest rate based on the Euribor rate plus a margin of 1.5%. An aggregate amount of $4.8 million of the bank loans are secured by mortgages on real property and the remaining $27.3 million are unsecured. Certain credit agreements for the unsecured bank loans include financial covenants which are based on an equity ratio or an equity ratio and minimum interest coverage ratio.

In addition, the Company had other unsecured revolving credit facilities and a secured bank loan in the amount of $5.8 million and $0.3 million, respectively, as of December 30, 2018 and $2.7 million and $0.3 million, respectively, as of December 31, 2017. The unsecured revolving debt facilities bear fixed interest rates between 2.3% and 17.6%. The secured bank loan of $0.3 million bears a fixed annual interest rate of 1.95% and is repaid in monthly installments until 2027.

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 was 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, plant 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 30, 2018, the Company had $34.5 million recorded for these financing lease obligations, of which $1.5 million was recorded as short-term debt and $33.0 million was recorded as long-term debt. At December 31, 2017, the Company had $35.9 million recorded for these financing lease obligations, of which $1.4 million was recorded as short-term debt and $34.5 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. Upon adoption of ASC 842, the Company will derecognize the impact of this build-to-suit arrangement.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the maturities of the Company’s indebtedness as of December 30, 2018:

Sr. Unsecured Revolving Credit Facility Maturing 2021November 2021 NotesApril 2021 Notes2026 NotesOther Debt FacilitiesFinancing Lease ObligationsTotal
(In thousands)
2019$—$—$—$—$13,324$1,532$14,856
2020————8,5271,59710,124
2021418,000500,000343,410—8,1971,6651,271,272
2022————3,9071,6575,564
2023————2,6411,6814,322
2024 and thereafter———572,3501,5744,698578,622
Total before unamortized discount and debt issuance costs and non-cash finance lease liabilities418,000500,000343,410572,35038,17012,8301,884,760
Unamortized discount and debt issuance costs(2,401)(2,628)(2,133)(7,806)——(14,968)
Non-cash finance lease liabilities—————21,68821,688
Total$415,599$497,372$341,277$564,544$38,170$34,518$1,891,480
Note 16:Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities as of December 30, 2018 and December 31, 2017 consisted of the following:

December 30, 2018December 31, 2017
(In thousands)
Payroll and incentives$86,549$66,955
Employee benefits44,06037,354
Deferred revenue155,064159,923
Federal, non-U.S. and state income taxes30,68710,800
Other accrued operating expenses212,467225,610
Total accrued expenses and other current liabilities$528,827$500,642
Note 17: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. Savings plan expense was $13.2 million in fiscal year 2018, $12.5 million in fiscal year 2017, and $12.8 million in fiscal year 2016.

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 business 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 30, 2018December 31, 2017January 1, 2017
(In thousands)
Service and administrative costs$6,853$4,951$4,337
Interest cost16,14616,70718,638
Expected return on plan assets(28,939)(26,401)(24,245)
Actuarial loss (gain)17,146(7,085)15,890
Amortization of prior service cost375(195)(210)
Net periodic pension cost (credit)$11,581$(12,023)$14,410

The Company recognizes actuarial gains and losses, unless an interim remeasurement is required, in the fourth quarter of the year in which the gains and losses occur, in accordance with the Company's accounting method for defined benefit pension plans and other postretirement benefits as described in Note 1, Basis of Presentation. Such adjustments for gains and losses are primarily driven by events and circumstances beyond the Company's control, including changes in interest rates, the performance of the financial markets and mortality assumptions. As discussed in Note 1, the Company adopted ASU 2017-07 on January 1, 2018. Actuarial gains and losses are now recognized in the line item "Interest and other expense, net" in the consolidated statements of operations. Actuarial gains and losses were presented within operating income prior to the adoption. As such, prior year amounts, including other components of periodic pension cost, have been reclassified to "Interest and other expense, net" in the Company's consolidated statements of operations due to the retrospective adoption of ASU 2017-07.

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 30, 2018 and December 31, 2017.

December 30, 2018December 31, 2017
Non-U.S.U.S.Non-U.S.U.S.
(In thousands)
Actuarial present value of benefit obligations:
Accumulated benefit obligations$304,065$283,310$334,151$308,713
Change in benefit obligations:
Projected benefit obligations at beginning of year$343,410$308,713$279,522$300,650
Service and administrative costs4,5282,3252,2012,750
Interest cost5,48410,6624,87011,836
Benefits paid and plan expenses(13,081)(19,709)(13,238)(20,032)
Participants’ contributions176—189—
Business acquisition537—39,293—
Plan amendments533———
Actuarial (gain) loss(13,141)(18,681)(1,486)13,509
Effect of exchange rate changes(17,278)—32,059—
Projected benefit obligations at end of year$311,168$283,310$343,410$308,713
Change in plan assets:
Fair value of plan assets at beginning of year$179,736$253,427$153,281$243,817
Actual return on plan assets(5,653)(14,376)15,86629,642
Benefits paid and plan expenses(13,081)(19,709)(13,238)(20,032)
Employer’s contributions8,48015,0008,422—
Participants’ contributions176—189—
Effect of exchange rate changes(10,495)—15,216—
Fair value of plan assets at end of year$159,163$234,342$179,736$253,427
Net liabilities recognized in the consolidated balance sheets$(152,005)$(48,968)$(163,674)$(55,286)
Net amounts recognized in the consolidated balance sheets consist of:
Other assets$31,419$—$26,591$—
Current liabilities(6,752)—(7,017)—
Long-term liabilities(176,672)(48,968)(183,248)(55,286)
Net liabilities recognized in the consolidated balance sheets$(152,005)$(48,968)$(163,674)$(55,286)
Net amounts recognized in accumulated other comprehensive income consist of:
Prior service cost$(278)$—$(457)$—
Actuarial assumptions as of the year-end measurement date:
Discount rate2.07%4.05%1.99%3.56%
Rate of compensation increase3.48%None3.50%None

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

December 30, 2018December 31, 2017January 1, 2017
Non-U.S.U.S.Non-U.S.U.S.Non-U.S.U.S.
Discount rate1.99%3.56%2.06%4.06%2.88%4.25%
Rate of compensation increase3.50%None3.64%None3.26%None
Expected rate of return on assets5.90%7.25%6.00%7.25%5.30%7.25%

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 30, 2018December 31, 2017
(In thousands)
Pension Plans with Projected Benefit Obligations in Excess of Plan Assets
Projected benefit obligations$183,424$190,265
Fair value of plan assets——
Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets
Accumulated benefit obligations$180,560$187,329
Fair value of plan assets——

Assets of the defined benefit pension plans are primarily equity and debt securities. Asset allocations as of December 30, 2018 and December 31, 2017, and target asset allocations for fiscal year 2019 are as follows:

Target AllocationPercentage of Plan Assets at
December 29, 2019December 30, 2018December 31, 2017
Asset CategoryNon-U.S.U.S.Non-U.S.U.S.Non-U.S.U.S.
Equity securities45-55%35-50%48%39%51%41%
Debt securities45-55%50-65%51%61%49%59%
Other0-5%0-10%1%—%0%—%
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 rate of return 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 for certain plans, 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, and a bond matching approach for certain plans.

During fiscal year 2016, for the plans in the United States, the Society of Actuaries issued an updated projection scale, MP-2016, which reduced the life expectancy used to determine the projected benefit obligation. The Company adopted MP-2016 as of January 1, 2017. The adoption of the updated projection scale resulted in a $5.5 million decrease to the projected benefit obligation at January 1, 2017. The Company adopted a further updated projection scale, MP-2017, as of December 31, 2017. The adoption of MP-2017 resulted in a $2.6 million decrease to the projected benefit obligation at December 31, 2017. During fiscal year 2018, the Society of Actuaries issued MP-2018 mortality improvement rates to replace MP-2017 rates for use with the RP-2014 mortality table, which incorporates an additional year (2016) of U.S. population. The Company adopted MP-2018 as of December 30, 2018. The adoption of MP-2018 resulted in a $1.0 million decrease to the projected benefit obligation at December 30, 2018. The changes to the projected benefit obligations due to the adoption of the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

mortality base table and projection scale are included within "Actuarial loss (gain)" in the Change in Benefit Obligations for fiscal years 2018 and 2017 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 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 30, 2018 and December 31, 2017 by asset category, classified in the three levels of inputs described in Note 23 to the consolidated financial statements are as follows:

Fair Value Measurements at December 30, 2018 Using:
Total Carrying Value at December 30, 2018Quoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
(In thousands)
Cash$6,326$6,326$—$—
Equity securities:
U.S. large-cap35,07235,072——
International large-cap value24,17524,175——
U.S. small mid-cap1,9281,928——
Emerging markets growth11,99311,993——
Equity index funds54,342—54,342—
Domestic real estate funds1,3531,353——
Foreign real estate funds22,196——22,196
Commodity funds886886——
Fixed income securities:
Non-U.S. treasury securities23,352—23,352—
Corporate and U.S. debt instruments131,21148,13383,078—
Corporate bonds24,848—24,848—
High yield bond funds5,1865,186——
Other types of investments:
Multi-strategy hedge funds16,934——16,934
Non-U.S. government index linked bonds33,703—33,703—
Total assets measured at fair value$393,505$135,052$219,323$39,130

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value Measurements at December 31, 2017 Using:
Total Carrying Value at December 31, 2017Quoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
(In thousands)
Cash$4,307$4,307$—$—
Equity Securities:
U.S. large-cap30,00830,008——
International large-cap value32,61332,613——
U.S. small-cap2,1042,104——
Emerging markets growth14,34814,348——
Equity index funds90,838—90,838—
Domestic real estate funds1,4011,401——
Commodity funds7,3877,387——
Fixed income securities:
Non-U.S. Treasury Securities24,946—24,946—
Corporate and U.S. debt instruments138,94840,29098,658—
Corporate bonds27,571—27,571—
High yield bond funds5,9125,912——
Other types of investments:
Multi-strategy hedge funds16,789——16,789
Non-U.S. government index linked bonds35,991—35,991—
Total assets measured at fair value$433,163$138,370$278,004$16,789

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 30, 2018 compared to December 31, 2017. 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, foreign real estate funds and venture capital funds are valued at fair value by using the net asset values provided by the investment managers and are updated, if necessary, using analytical procedures, appraisals, public market data and/or inquiry of the investment managers. The net asset values are determined based upon the fair values of the underlying investments in the funds. These other investments invest primarily in readily available marketable securities and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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 2018, 2017 and 2016 is as follows:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):
Venture Capital FundsForeign Real Estate FundsMulti-strategy Hedge FundsTotal
(In thousands)
Balance at January 3, 2016$1$—$23,415$23,416
Realized losses(1)——(1)
Unrealized gains——375375
Balance at January 1, 2017——23,79023,790
Sales——(8,189)(8,189)
Realized gains——1,5421,542
Unrealized losses——(354)(354)
Balance at December 31, 2017——16,78916,789
Purchases—22,196—22,196
Unrealized gains——145145
Balance at December 30, 2018$—$22,196$16,934$39,130

With respect to plans outside of the United States, the Company expects to contribute $8.3 million in the aggregate during fiscal year 2019. During fiscal year 2018, the Company contributed $8.5 million, in the aggregate, to pension plans outside of the United States and $15.0 million to its defined benefit pension plan in the United States for the plan year 2017. During fiscal year 2017, the Company made contributions of $8.4 million, in the aggregate, to plans outside of the United States. During fiscal year 2016, the Company contributed $9.6 million, in the aggregate, to 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)
2019$11,313$18,774
202011,65418,948
202112,20019,176
202212,26719,353
202312,55119,462
2024-202867,45795,403

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 30, 2018 and December 31, 2017, the projected benefit obligations were $22.1 million and $23.7 million, respectively. Assets with a fair value of $1.8 million and $1.4 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 30, 2018 and December 31, 2017, respectively. Pension expenses and income for this plan netted to income of $0.3 million in fiscal year 2018, expense of $3.2 million in fiscal year 2017 and expense of $1.6 million in fiscal year 2016.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 cost (credit) included the following components for the fiscal years ended:

December 30, 2018December 31, 2017January 1, 2017
(In thousands)
Service cost$106$92$101
Interest cost120125142
Expected return on plan assets(1,254)(1,114)(1,035)
Actuarial loss (gain)1,621(741)(539)
Net periodic postretirement medical benefit cost (credit)$593$(1,638)$(1,331)

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 30, 2018 and December 31, 2017.

December 30, 2018December 31, 2017
(In thousands)
Actuarial present value of benefit obligations:
Retirees$688$804
Active employees eligible to retire408379
Other active employees2,3171,948
Accumulated benefit obligations at beginning of year3,4133,131
Service cost10692
Interest cost120125
Benefits paid(117)(122)
Actuarial (gain) loss(611)187
Change in accumulated benefit obligations during the year(502)282
Retirees583688
Active employees eligible to retire362408
Other active employees1,9662,317
Accumulated benefit obligations at end of year$2,911$3,413
Change in plan assets:
Fair value of plan assets at beginning of year$17,374$15,453
Actual return on plan assets(993)1,921
Benefits reimbursements paid(102)—
Fair value of plan assets at end of year$16,279$17,374
Net assets recognized in the consolidated balance sheets$13,368$13,961
Net amounts recognized in the consolidated balance sheets consist of:
Other assets$13,368$13,961
Net amounts recognized in accumulated other comprehensive income consist of:
Prior service cost$—$—
Actuarial assumptions as of the year-end measurement date:
Discount rate4.09%3.60%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

December 30, 2018December 31, 2017January 1, 2017
Discount rate3.60%4.11%4.34%
Expected rate of return on assets7.25%7.25%7.25%

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.

The fair values of the Company’s plan assets at December 30, 2018 and December 31, 2017 by asset category, classified in the three levels of inputs described in Note 23, are as follows:

Fair Value Measurements at December 30, 2018 Using:
Total Carrying Value at December 30, 2018Quoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
(In thousands)
Cash$390$390$—$—
Equity securities:
U.S. large-cap2,4362,436——
International large-cap value1,6791,679——
U.S. small mid-cap134134——
Emerging markets growth833833——
Domestic real estate funds9494——
Commodity funds6262——
Fixed income securities:
Corporate debt instruments9,1153,3445,771—
High yield bond funds360360——
Other types of investments:
Multi-strategy hedge funds1,176——1,176
Total assets measured at fair value$16,279$9,332$5,771$1,176

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value Measurements at December 31, 2017 Using:
Total Carrying Value at December 31, 2017Quoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
(In thousands)
Cash$268$268$—$—
Equity securities:
U.S. large-cap2,0572,057——
International large-cap value2,2362,236——
U.S. small mid-cap144144——
Emerging markets growth984984——
Domestic real estate funds9696——
Commodity funds506506——
Fixed income securities:
Corporate debt instruments9,5262,7626,764—
High yield bond funds406406——
Other types of investments:
Multi-strategy hedge funds1,151——1,151
Total assets measured at fair value$17,374$9,459$6,764$1,151

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 2018, 2017 and 2016 is as follows:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):
Multi-strategy Hedge Funds
(In thousands)
Balance at January 3, 2016$1,374
Unrealized gains134
Balance at January 1, 20171,508
Sales(562)
Realized gains229
Unrealized losses(24)
Balance at December 31, 20171,151
Unrealized gains25
Balance at December 30, 2018$1,176

The Company does not expect to make any contributions to the postretirement medical plan during fiscal year 2019.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Postretirement Medical Plan
(In thousands)
2019$136
2020149
2021168
2022184
2023194
2024-20281,050

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 $1.1 million at December 30, 2018 and $1.0 million at December 31, 2017.

Note 18: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 $7.9 million and $9.4 million as of December 30, 2018 and December 31, 2017, respectively, in accrued expenses and other current liabilities, which represents its management’s estimate of the cost of the remediation of known environmental matters, and does not include any potential liability for related personal injury or property damage claims. The Company'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 30, 2018 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 19: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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of warranty reserve activity for the fiscal years ended December 30, 2018, December 31, 2017 and January 1, 2017 is as follows:

(In thousands)
Balance at January 3, 2016$9,843
Provision charged to income14,901
Payments(14,749)
Adjustments to previously provided warranties, net(850)
Foreign currency translation and acquisitions(133)
Balance at January 1, 20179,012
Provision charged to income13,700
Payments(14,245)
Adjustments to previously provided warranties, net(815)
Foreign currency translation and acquisitions1,398
Balance at December 31, 20179,050
Provision charged to income13,545
Payments(13,775)
Adjustments to previously provided warranties, net(157)
Foreign currency translation and acquisitions(270)
Balance at December 30, 2018$8,393
Note 20: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, 10.0 million shares of the Company's common stock are authorized for stock option grants, restricted stock awards, performance restricted stock units, 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 restricted stock units, performance units and stock grants, net of estimated forfeitures, included in the Company’s consolidated statements of operations for fiscal years 2018, 2017 and 2016:

December 30, 2018December 31, 2017January 1, 2017
(In thousands)
Cost of product and service revenue$1,466$1,254$1,031
Research and development expenses1,3591,389902
Selling, general and administrative expenses25,94222,77815,225
Total stock-based compensation expense$28,767$25,421$17,158

The total income tax benefit recognized in the consolidated statements of operations for stock-based compensation was $13.6 million in fiscal year 2018, $14.5 million in fiscal year 2017 and $10.5 million in fiscal year 2016. Stock-based compensation costs capitalized as part of inventory were $0.3 million as of each of December 30, 2018 and December 31, 2017.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 based on the historical and implied 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. The Company’s weighted-average assumptions used in the Black-Scholes option pricing model were as follows for the fiscal years ended:

December 30, 2018December 31, 2017January 1, 2017
Risk-free interest rate3.0%2.0%1.7%
Expected dividend yield0.4%0.4%0.6%
Expected lives5 years5 years5 years
Expected stock volatility20.7%22.4%25.2%

The following table summarizes stock option activity for the fiscal year ended December 30, 2018:

December 30, 2018
Number of SharesWeighted- Average Exercise Price
(Shares in thousands)
Outstanding at beginning of year2,154$42.77
Granted36477.84
Exercised(709)35.02
Forfeited(44)51.56
Outstanding at end of year1,765$52.91
Exercisable at end of year965$44.60

The aggregate intrinsic value for stock options outstanding at December 30, 2018 was $43.8 million with a weighted-average remaining contractual term of 4.2 years. The aggregate intrinsic value for stock options exercisable at December 30, 2018 was $31.6 million with a weighted-average remaining contractual term of 3.2 years. At December 30, 2018, there were 1.8 million stock options that were vested, and expected to vest in the future, with an aggregate intrinsic value of $43.0 million and a weighted-average remaining contractual term of 4.2 years.

The weighted-average per-share grant-date fair value of options granted during fiscal years 2018, 2017 and 2016 was $17.56, $11.83, and $10.20, respectively. The total intrinsic value of options exercised during fiscal years 2018, 2017 and 2016 was $35.0 million, $17.6 million, and $16.6 million, respectively. Cash received from option exercises for fiscal years 2018, 2017 and 2016 was $24.8 million, $18.0 million, and $14.4 million, respectively. The total compensation expense recognized related to the Company’s outstanding options was $5.4 million in fiscal year 2018, $4.7 million in fiscal year 2017 and $4.4 million in fiscal year 2016.

There was $6.7 million of total unrecognized compensation cost related to nonvested stock options granted as of December 30, 2018. This cost is expected to be recognized over a weighted-average period of 1.8 years.

Restricted Stock Awards: The Company has awarded shares of restricted stock and restricted stock units to certain employees and non-employee directors 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 3 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes restricted stock award activity for the fiscal year ended December 30, 2018:

December 30, 2018
Number of SharesWeighted- Average Grant- Date Fair Value
(Shares in thousands)
Nonvested at beginning of year496$50.30
Granted21476.00
Vested(206)50.37
Forfeited(39)55.73
Nonvested at end of year465$61.72

The fair value of restricted stock awards vested during fiscal years 2018, 2017 and 2016 was $10.4 million, $10.6 million, and $8.4 million, respectively. The total compensation expense recognized related to the restricted stock awards was $11.7 million in fiscal year 2018, $10.3 million in fiscal year 2017 and $9.3 million in fiscal year 2016.

As of December 30, 2018, there was $16.0 million of total unrecognized compensation cost, related to nonvested restricted stock awards. That cost is expected to be recognized over a weighted-average period of 1.4 years.

Performance Restricted Stock Units: As part of the Company's executive compensation program, the Company granted 39,133 and 54,337 performance restricted stock units during fiscal years 2018 and 2017, respectively, that will vest based on performance of the Company. The weighted-average per-share grant date fair value of performance restricted stock units granted during fiscal years 2018 and 2017 was $80.31 and $52.78, respectively. During fiscal year 2018, 5,797 performance restricted stock units were forfeited. The total compensation expense recognized related to the performance restricted stock units was $3.2 million in fiscal year 2018 and $0.9 million in fiscal year 2017. As of December 30, 2018, there were 87,673 performance restricted stock units outstanding.

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 37,281 performance units, 49,845 performance units, and 72,164 performance units during fiscal years 2018, 2017 and 2016, respectively. The weighted-average per-share grant-date fair value of performance units granted during fiscal years 2018, 2017 and 2016 was $73.23, $52.69, and $42.79, respectively. During fiscal year 2018, no performance units were forfeited. During fiscal years 2017 and 2016, 15,139 and 19,584 performance units were forfeited, respectively. The total compensation expense related to performance units was $7.7 million, $8.7 million, and $2.7 million for fiscal years 2018, 2017 and 2016, respectively. As of December 30, 2018, there were 144,151 performance units outstanding subject to forfeiture, with a corresponding liability of $14.0 million recorded in accrued expenses and long-term liabilities.

Stock Awards: The Company’s stock award program provides an annual equity award to non-employee directors. For fiscal years 2018, 2017 and 2016, 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 2018, 2017 and 2016, the Company awarded 11,088 shares, 12,006 shares, and 15,419 shares, respectively, to non-employee directors. The weighted-average per-share grant-date fair value of stock awards granted during fiscal years 2018, 2017 and 2016 was $72.17, $63.14, and $54.58, respectively. The total compensation expense recognized related to these stock awards was $0.8 million in each of fiscal years 2018, 2017 and 2016.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

compensation. During fiscal year 2018, the Company issued 21,321 shares of common stock under the Company’s Employee Stock Purchase Plan at a weighted-average price of $69.57 per share. During fiscal year 2017, the Company issued 36,769 shares under this plan at a weighted-average price of $67.09 per share. During fiscal year 2016, the Company issued 49,578 shares under this plan at a weighted-average price of $49.67 per share. At December 30, 2018 there remains available for sale to employees an aggregate of 0.8 million shares of the Company’s common stock out of the 5.0 million shares authorized by shareholders for issuance under this plan.

Note 21:Stockholders’ Equity

Comprehensive Income:

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

Foreign Currency Translation Adjustment, net of taxUnrecognized Prior Service Costs, net of taxUnrealized (Losses) Gains on Securities, net of taxAccumulated Other Comprehensive Income (Loss)
(In thousands)
Balance, January 3, 2016$(46,846)$1,259$(369)$(45,956)
Current year change(54,077)(860)32(54,905)
Balance, January 1, 2017(100,923)399(337)(100,861)
Current year change54,341(77)7954,343
Balance, December 31, 2017(46,582)322(258)(46,518)
Current year change(123,388)(77)(9)(123,474)
Reclassification to retained earnings upon adoption of ASU 2018-02 (see Note 1)(6,489)——(6,489)
Balance, December 30, 2018$(176,459)$245$(267)$(176,481)

During fiscal years 2018, 2017 and 2016, pre-tax expense of $0.1 million, $0.1 million, and $0.9 million, respectively, was reclassified from accumulated other comprehensive income into selling, general and administrative expenses as a component of net periodic pension cost.

Stock Repurchases:

On July 27, 2016, the Board of Directors (the "Board") authorized the Company to repurchase up to 8.0 million shares of common stock under a stock repurchase program (the "Repurchase Program"). On July 23, 2018, the Board authorized the Company to immediately terminate the Repurchase Program and further authorized the Company to repurchase shares of common stock for an aggregate amount up to $250.0 million under a new stock repurchase program (the "New Repurchase Program"). The New Repurchase Program will expire on July 23, 2020 unless terminated earlier by the Board and may be suspended or discontinued at any time. During fiscal year 2018, the Company had no stock repurchases under the Repurchase Program. No shares remain available for repurchase under the Repurchase Program due to its cancellation. During the fourth quarter of fiscal year 2018, the Company repurchased 650,000 shares of common stock under the New Repurchase Program at an aggregate cost of $52.2 million. As of December 30, 2018, $197.8 million remained available for aggregate repurchases of shares under the New Repurchase Program.

In addition, the Board has authorized the Company to repurchase shares of common stock to satisfy minimum statutory tax withholding obligations in connection with the vesting of restricted stock awards and restricted stock unit awards granted pursuant to the Company’s equity incentive plans and to satisfy obligations related to the exercise of stock options made pursuant to the Company's equity incentive plans. During the fiscal year 2018, the Company repurchased 66,506 shares of common stock for this purpose at an aggregate cost of $5.2 million. During fiscal year 2017, the Company repurchased 78,644 shares of common stock for this purpose at an aggregate cost of $4.4 million. During fiscal year 2016, the Company repurchased 75,198 shares of common stock for this purpose at an aggregate cost of $3.6 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 2018 and 2017. At December 30, 2018, the Company had accrued $7.7 million for a dividend declared on October 24, 2018 for the fourth quarter

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of fiscal year 2018 that was paid in February 2019. On January 24, 2019, the Company announced that the Board had declared a quarterly dividend of $0.07 per share for the first quarter of fiscal year 2019 that will be payable in May 2019. 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 22: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 70% of the Company’s business is conducted outside of the United States, generally in foreign currencies. As a result, fluctuations in foreign currency exchange rates can increase the costs of financing, investing and operating the business.

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. 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. 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. The unrealized gains and losses on the Company’s foreign currency contracts are recognized immediately in interest and other expense, net. The cash flows related to the settlement of these hedges are included in cash flows from operating activities within the Company’s consolidated statements of cash flows.

Principal hedged currencies include the British Pound, Euro, Swedish Krona, Chinese Yuan and Singapore Dollar. The Company held forward foreign exchange contracts, designated as economic hedges, with U.S. dollar equivalent notional amounts totaling $223.3 million at December 30, 2018, $212.1 million at December 31, 2017, and $137.5 million at January 1, 2017, and the fair value of these foreign currency derivative contracts was insignificant. The gains and losses realized on these foreign currency derivative contracts are not material. The duration of these contracts was generally 30 days or less during each of fiscal years 2018, 2017 and 2016.

In addition, in connection with certain intercompany loan agreements utilized to finance its acquisitions and stock repurchase program, the Company enters into forward foreign exchange contracts intended to hedge movements in foreign exchange rates prior to settlement of such intercompany loans denominated in foreign currencies. The Company records these hedges at fair value on the Company’s consolidated balance sheets. The unrealized gains and losses on these hedges, as well as the gains and losses associated with the remeasurement of the intercompany loans, are recognized immediately in interest and other expense, net. The cash flows related to the settlement of these hedges are included in cash flows from financing activities within the Company’s consolidated statements of cash flows.

The outstanding forward exchange contracts designated as economic hedges, which were intended to hedge movements in foreign exchange rates prior to the settlement of certain intercompany loan agreements, included combined Euro notional amounts of €37.3 million and combined U.S. Dollar notional amounts of $5.7 million as of December 30, 2018, combined Euro notional amounts of €57.2 million and combined U.S. Dollar notional amounts of $1.3 billion as of December 31, 2017, and combined Euro notional amounts of €58.6 million, combined U.S. Dollar notional amounts of $8.7 million and combined Swedish Krona notional amounts of kr969.5 million as of January 1, 2017. The net gains and losses on these derivatives, combined with the gains and losses on the remeasurement of the hedged intercompany loans were not material for each of the fiscal years 2018 and 2017. The Company paid $34.1 million and $13.8 million during the fiscal years 2018 and 2017, respectively, from the settlement of these hedges.

During fiscal year 2018, the Company entered into a series of foreign currency forward contracts with a notional amount of €298.7 million to hedge its investments in certain foreign subsidiaries. Realized and unrealized translation adjustments from these hedges were included in the foreign currency translation component of AOCI, which offsets translation adjustments on the underlying net assets of foreign subsidiaries. The cumulative translation gains or losses will remain in AOCI until the foreign subsidiaries are liquidated or sold. The foreign currency forward contracts were settled during the second quarter of 2018 and the Company recorded a net realized foreign exchange loss in AOCI of $2.6 million for the fiscal year ended December 30, 2018.

During fiscal year 2016, the Company designated the 2026 Notes to hedge its investments in certain foreign subsidiaries. In January 2018, the Company removed the hedging relationship of its 2026 Notes and investments in certain foreign

subsidiaries and recognized $2.1 million of unrealized foreign exchange gain in AOCI. In April 2018, the Company designated a portion of the 2026 Notes to hedge its investments in certain foreign subsidiaries. Unrealized translation adjustments from a portion of the 2026 Notes were included in the foreign currency translation component of AOCI, which offsets translation adjustments on the underlying net assets of foreign subsidiaries. The cumulative translation gains or losses will remain in AOCI until the foreign subsidiaries are liquidated or sold. As of December 30, 2018, the total notional amount of the 2026 Notes that was designated to hedge investments in foreign subsidiaries was €216.0 million. The unrealized foreign exchange gain recorded in AOCI related to the net investment hedge was $9.3 million for the fiscal year ended December 30, 2018.

During fiscal year 2018, the Company designated the April 2021 Notes to hedge its investments in certain foreign subsidiaries. Unrealized translation adjustments from the April 2021 Notes were included in the foreign currency translation component of AOCI, which offsets translation adjustments on the underlying net assets of foreign subsidiaries. The cumulative translation gains or losses will remain in AOCI until the foreign subsidiaries are liquidated or sold. As of December 30, 2018, the total notional amount of the April 2021 Notes that was designated to hedge investments in foreign subsidiaries was €298.7 million. The unrealized foreign exchange gain recorded in AOCI related to the net investment hedge was $27.5 million for the fiscal year ended December 30, 2018.

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

Note 23: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 30, 2018.

The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during fiscal years 2018 and 2017. 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.

The following tables show the assets and liabilities carried at fair value measured on a recurring basis as of December 30, 2018 and December 31, 2017 classified in one of the three classifications described above:

Fair Value Measurements at December 30, 2018 Using:
Total Carrying Value at December 30, 2018Quoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
(In thousands)
Marketable securities$2,447$2,447$—$—
Foreign exchange derivative assets750—750—
Foreign exchange derivative liabilities(594)—(594)—
Contingent consideration(69,661)——(69,661)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value Measurements at December 31, 2017 Using:
Total Carrying Value at December 31, 2017Quoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
(In thousands)
Marketable securities$2,208$2,208$—$—
Foreign exchange derivative assets1,431—1,431—
Foreign exchange derivative liabilities, net(23,638)—(23,638)—
Contingent consideration(65,328)——(65,328)

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 30, 2018 and December 31, 2017, 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: Contingent consideration is measured at fair value at the acquisition date using projected milestone dates, discount rates, probabilities of success and projected revenues (for revenue-based considerations). Projected risk-adjusted contingent payments are discounted back to the current period using a discounted cash flow model.

During fiscal year 2015, the Company acquired all the shares of Vanadis. Under the terms of the acquisition, the initial purchase consideration was $32.0 million, net of cash and the Company will be obligated to make potential future milestone payments, based on completion of a proof of concept, regulatory approvals and product sales, of up to $93.0 million ranging from 2016 to 2019. The key assumptions used to determine the fair value of the contingent consideration included projected milestone dates of 2016 to 2019, discount rates ranging from 3.1% to 11.3%, conditional probabilities of success of each individual milestone ranging from 85% to 95% and cumulative probabilities of success for each individual milestone ranging from 53% to 90%. The fair value of the contingent consideration as of the acquisition date was estimated at $56.9 million. During fiscal year 2018, the Company updated the fair value of the contingent consideration and recorded a liability of $63.2 million as of December 30, 2018. The key assumptions used to determine the fair value of the contingent consideration as of December 30, 2018 included projected milestone dates in 2019, discount rates ranging from 3.7% to 6.8%, conditional probabilities of success of each individual milestone ranging from 95% to 100% and cumulative probabilities of success for each individual milestone ranging from 89.3% to 100%. A significant delay in the product development (including projected regulatory milestone) achievement date in isolation could result in a significantly lower fair value measurement; a significant acceleration in the product development (including projected regulatory milestone) achievement date in isolation would not have a material impact on the fair value measurement; a significant change in the discount rate in isolation would not have a material impact on the fair value measurement; and a significant change in the probabilities of success in isolation could result in a significant change in fair value measurement.

During the fiscal year 2018, the Company recorded a contingent consideration obligation relating to other acquisitions with an estimated fair value of $6.5 million and the Company paid $16.5 million of contingent consideration to the former shareholders of Vanadis, of which $12.8 million was included in financing activities and $3.7 million was included in operating activities in the consolidated statements of cash flows.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

As of December 30, 2018, the Company may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $76.5 million. The expected maximum earnout period for acquisitions with open contingency period does not exceed 1.78 years from the December 30, 2018, and the remaining weighted average expected earnout period at December 30, 2018 was 5 months.

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

(In thousands)
Balance at January 3, 2016$(57,350)
Additions—
Amounts paid and foreign currency translation332
Reclassified to other current liabilities for milestone achieved10,000
Change in fair value (included within selling, general and administrative expenses)(16,183)
Balance at January 1, 2017(63,201)
Additions—
Amounts paid and foreign currency translation34
Change in fair value (included within selling, general and administrative expenses)(2,161)
Balance at December 31, 2017(65,328)
Additions(6,200)
Amounts paid and foreign currency translation16,507
Change in fair value (included within selling, general and administrative expenses)(14,640)
Balance at December 30, 2018$(69,661)

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.

As of December 30, 2018, the Company’s senior unsecured revolving credit facility, which provides for $1.0 billion of revolving loans, had a carrying value of $415.6 million, net of $2.4 million of unamortized debt issuance costs. As of December 31, 2017, the Company's senior unsecured revolving credit facility had a carrying value of $621.7 million, net of $3.3 million of unamortized debt issuance costs. 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 2018. Consequently, the carrying value approximates fair value and were classified as Level 2.

The Company's November 2021 Notes, with a face value of $500.0 million, had an aggregate carrying value of $497.4 million, net of $1.1 million of unamortized original issue discount and $1.6 million of unamortized debt issuance costs as of December 30, 2018. The November 2021 Notes had an aggregate carrying value of $496.6 million, net of $1.4 million of unamortized original issue discount and $2.0 million of unamortized debt issuance costs as of December 31, 2017. The November 2021 Notes had a fair value of $516.1 million and $536.6 million as of December 30, 2018 and December 31, 2017, respectively. The fair value of the November 2021 Notes is estimated using market quotes from brokers and is based on current rates offered for similar debt.

The Company's 2026 Notes, with a face value of €500.0 million, had an aggregate carrying value of $564.5 million, net of $4.0 million of unamortized original issue discount and $3.8 million of unamortized debt issuance costs as of December 30, 2018. The 2026 Notes had an aggregate carrying value of $591.7 million, net of $4.7 million of unamortized original issue discount and $4.3 million of unamortized debt issuance costs as of December 31, 2017. The 2026 Notes had a fair value of €496.1 million and €508.9 million as of December 30, 2018 and December 31, 2017, respectively. The fair value of the 2026 Notes is estimated using market quotes from brokers and is based on current rates offered for similar debt.

The Company's April 2021 Notes, with a face value of €300.0 million, had an aggregate carrying value of $341.3 million, net of $0.1 million of unamortized original issue discount and $2.0 million of unamortized debt issuance costs as of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 30, 2018. The April 2021 Notes had a fair value of €300.5 million as of December 30, 2018. The fair value of the April 2021 Notes is estimated using market quotes from brokers and is based on current rates offered for similar debt.

The Company’s other debt facilities that were assumed from the EUROIMMUN acquisition had an aggregate carrying value of $38.2 million and $60.2 million as of December 30, 2018 and December 31, 2017, respectively. As of December 30, 2018, these consisted of bank loans in the aggregate amount of $38.0 million bearing fixed interest rates between 1.1% and 17.6% and a bank loan in the amount of $0.2 million bearing a variable interest rate based on the Euribor rate plus a margin of 1.5%. The Company had no change in credit standing during fiscal year 2018. Consequently, the carrying value approximates fair value.

As of December 30, 2018, the April 2021 Notes, November 2021 Notes, 2026 Notes and other debt facilities were classified as Level 2.

The Company's financing lease obligations had an aggregate carrying value of $34.5 million and $35.9 million as of December 30, 2018 and December 31, 2017, respectively. The non-cash finance lease liabilities due to build-to-suit accounting amounted to $21.7 million as of each of the year ended December 30, 2018 and December 31, 2017. The remaining carrying amounts of the Company's financing lease obligations approximated their fair value as there has been minimal change in the Company's incremental borrowing rate.

As of December 30, 2018, 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 24:Leases

The Company leases certain property and equipment under operating leases. Rental expense charged to continuing operations for fiscal years 2018, 2017 and 2016 amounted to $62.3 million, $54.0 million, and $52.0 million, respectively. Minimum rental commitments under noncancelable operating leases are as follows: $56.4 million in fiscal year 2019, $46.6 million in fiscal year 2020, $33.5 million in fiscal year 2021, $22.1 million in fiscal year 2022, $15.6 million in fiscal year 2023 and $67.6 million in fiscal year 2024 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. The Company amortized $1.8 million of the deferred gains related to the lease during each of the fiscal years 2018, 2017 and 2016. The deferred gains remaining to be amortized were $17.0 million at December 30, 2018, of which $1.8 million was recorded in accrued expenses and other current liabilities, and $15.3 million was recorded in long-term liabilities. The deferred gains remaining to be amortized were $18.8 million at December 31, 2017, of which $1.8 million was recorded in accrued expenses and other current liabilities, and $17.0 million was recorded in long-term liabilities. Upon adoption of ASC 842, the Company will recognize the unamortized deferred gains in retained earnings.

Note 25: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 accounting policies of the operating segments are the same as those described in Note 1.

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

•Discovery & Analytical Solutions. Provides products and services targeted towards the life sciences and applied markets.
•Diagnostics. Develops diagnostics, tools and applications focused on clinically-oriented customers, especially within the reproductive health, emerging market diagnostics and applied genomics markets. The Diagnostics segment serves the diagnostics market.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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

December 30, 2018December 31, 2017January 1, 2017
(In thousands)
Discovery & Analytical Solutions
Product revenue$1,010,899$941,328$934,098
Service revenue682,312637,131578,886
Total revenue1,693,2111,578,4591,512,984
Operating income from continuing operations(1)230,481205,259196,508
Diagnostics
Product revenue924,594536,086462,798
Service revenue160,191142,437139,735
Total revenue1,084,785678,523602,533
Operating income from continuing operations(2)153,196146,862147,996
Corporate
Operating loss from continuing operations(59,793)(56,506)(49,922)
Continuing Operations
Product revenue1,935,4931,477,4141,396,896
Service revenue842,503779,568718,621
Total revenue2,777,9962,256,9822,115,517
Operating income from continuing operations323,884295,615294,582
Interest and other expense, net (see Note 7)66,201(1,103)50,514
Income from continuing operations before income taxes$257,683$296,718$244,068
(1)Legal costs for significant litigation matters in the Company's Discovery & Analytical Solutions segment were $5.3 million for fiscal year 2018 and $2.7 million for fiscal year 2017.
(2)Legal costs for a significant litigation matter in the Company's Diagnostics segment were $0.2 million for fiscal year 2018.

Additional information relating to the Company’s reporting segments is as follows for the three fiscal years ended December 30, 2018:

Depreciation and Amortization ExpenseCapital Expenditures
December 30, 2018December 31, 2017January 1, 2017December 30, 2018December 31, 2017January 1, 2017
(In thousands)(In thousands)
Discovery & Analytical Solutions$70,362$72,590$72,484$34,852$26,200$21,486
Diagnostics107,43431,20425,33954,73711,2628,556
Corporate2,7921,2062,1493,6641,6271,660
Continuing operations$180,588$105,000$99,972$93,253$39,089$31,702
Discontinued operations$—$929$6,266$—$182$1,302

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total Assets
December 30, 2018December 31, 2017January 1, 2017
(In thousands)
Discovery & Analytical Solutions$2,567,054$2,611,737$2,612,757
Diagnostics3,358,9643,447,4371,505,381
Corporate49,50432,28931,171
Current and long-term assets of discontinued operations——127,374
Total assets$5,975,522$6,091,463$4,276,683

The following geographic area information for continuing operations includes revenue based on location of external customers for the three fiscal years ended December 30, 2018 and net long-lived assets based on physical location as of December 30, 2018 and December 31, 2017:

Revenue
December 30, 2018December 31, 2017January 1, 2017
(In thousands)
U.S.$906,398$837,018$842,364
International:
China559,865374,931336,728
United Kingdom72,12465,16465,904
Germany142,41191,66989,839
India92,32784,81243,891
Italy95,90877,47770,948
France97,99080,15371,104
Japan79,23876,32265,980
Other international731,735569,436528,759
Total international1,871,5981,419,9641,273,153
Total sales$2,777,996$2,256,982$2,115,517
Net Long-Lived Assets
December 30, 2018December 31, 2017January 1, 2017
(In thousands)
U.S.$201,649$210,116$182,186
International:
Germany99,18188,2491,292
China61,26164,81536,458
United Kingdom33,42928,02814,638
India14,63614,8202,020
Finland16,21114,76412,295
Italy11,32410,3343,398
Singapore14,9429,2406,820
Brazil8,2377,9631,452
Netherlands3,7504,2814,162
Sweden3,0383,8692,645
Other international22,65319,5657,684
Total international288,662265,92892,864
Total net long-lived assets$490,311$476,044$275,050

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 26:Quarterly Financial Information (Unaudited)

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

First QuarterSecond QuarterThird QuarterFourth Quarter(1)Year
(In thousands, except per share data)
December 30, 2018
Revenue$643,972$703,362$674,313$756,349$2,777,996
Gross profit292,222340,140332,327376,2501,340,939
Restructuring and contract termination charges, net6,578—6,508(1,942)11,144
Operating income from continuing operations39,93588,06480,202115,683323,884
Income from continuing operations before income taxes28,50571,70878,04179,429257,683
Income from continuing operations26,03564,67375,44571,322237,475
Loss (income) from discontinued operations and dispositions(11)(610)1,103(30)452
Net income26,02464,06376,54871,292237,927
Basic earnings per share:
Income from continuing operations$0.24$0.59$0.68$0.64$2.15
Income (loss) from discontinued operations and dispositions—(0.01)0.01——
Net income0.240.580.690.642.15
Diluted earnings per share:
Income from continuing operations$0.23$0.58$0.68$0.64$2.13
Income (loss) from discontinued operations and dispositions—(0.01)0.01——
Net income0.230.570.690.642.13
Cash dividends declared per common share$0.07$0.07$0.07$0.07$0.28
December 31, 2017
Revenue$514,115$546,962$554,275$641,630$2,256,982
Gross profit239,756257,602268,967307,4291,073,754
Restructuring and contract termination charges, net9,651—3,269(263)12,657
Operating income from continuing operations49,81174,18378,03893,583295,615
Income from continuing operations before income taxes39,98370,792105,05480,889296,718
Income (loss) from continuing operations36,06262,72696,546(38,444)156,890
Income (loss) from discontinued operations and dispositions2,541141,343(5,468)(2,673)135,743
Net income (loss)38,603204,06991,078(41,117)292,633
Basic earnings per share:
Income (loss) from continuing operations$0.33$0.57$0.88$(0.35)$1.43
Income (loss) from discontinued operations and dispositions0.021.29(0.05)(0.02)1.24
Net income (loss)0.351.860.83(0.37)2.67
Diluted earnings per share:
Income (loss) continuing operations$0.33$0.57$0.87$(0.35)$1.42
Income (loss) from discontinued operations and dispositions0.021.28(0.05)(0.02)1.22
Net income (loss)0.351.840.82(0.37)2.64
Cash dividends declared per common share$0.07$0.07$0.07$0.07$0.28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1)The fourth quarter of fiscal year 2018 includes a pre-tax loss of $21.4 million as a result of the mark-to-market adjustment on postretirement benefit plans. The fourth quarter of fiscal year 2017 includes a pre-tax gain of $2.1 million as a result of the mark-to-market adjustment on postretirement benefit plans. See Note 1 for a discussion of this accounting policy.

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