Item 8. Financial Statements and Supplemental Data

TABLE OF CONTENTS

Report of Independent Registered Public Accounting Firm			51
Consolidated Statements of Operations for Each of the Three Fiscal Years in the Period Ended January 3, 2021			52
Consolidated Statements of Comprehensive Income for Each of the Three Fiscal Years in the Period Ended January 3, 2021			53
Consolidated Balance Sheets as of January 3, 2021 and December 29, 2019			54
Consolidated Statements of Stockholders’ Equity for Each of the Three Fiscal Years in the Period Ended January 3, 2021			55
Consolidated Statements of Cash Flows for Each of the Three Fiscal Years in the Period Ended January 3, 2021			56
Notes to Consolidated Financial Statements			58

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the 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 January 3, 2021 and December 29, 2019, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended January 3, 2021, 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 January 3, 2021 and December 29, 2019, and the results of its operations and its cash flows for each of the three years in the period ended January 3, 2021, 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 January 3, 2021, 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 March 2, 2021 expressed an unqualified opinion on the Company’s internal control over financial reporting.

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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company recognizes revenue as it fulfills its performance obligations and transfers control of products or renders services to its customers. The Company entered into a contract (the “Contract”) with the State of California to perform COVID-19 testing. The Contract includes variable consideration for monthly testing capacity as well as for completing testing on individual samples. The Company also received consideration upfront to set-up the testing location and ensure its readiness for the performance of testing as the testing samples were provided. The accounting for the Contract involves management judgment, particularly in the identification of the performance obligations and in the allocation of consideration to each performance obligation. The amount recognized per completed test is based on the Company’s forecast of tests to be performed per month over the period of contract performance.

We identified the revenue recognition related to this contract as a critical audit matter because of the significant estimates and assumptions management made in identifying performance obligations and in allocating consideration to each performance

obligation. This required a higher degree of auditor judgment and an increased extent of effort, when performing audit procedures to evaluate the reasonableness of the related revenue recognition.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the identification of performance obligations and allocation of consideration to each performance obligation included the following, among others:

• We tested the effectiveness of controls over the revenue recognition process, including management’s controls over the identification of performance obligations, allocation of consideration to performance obligations and forecasting testing levels.

• We assessed the reasonableness of management’s determination of performance obligations by independently reading the contract to determine each promise in the contract and evaluating the promise to determine if each promise represents a separate performance obligation.

• We assessed the reasonableness of management’s determination of transaction price; including variable consideration, by independently evaluating the determination of fixed consideration and constraints applied to variable consideration based on the forecasted testing levels and recalculating the consideration allocated to each performance obligation.

/s / DELOITTE & TOUCHE LLP

Boston, Massachusetts

March 2, 2021

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

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Fiscal Years Ended

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands, except per share data)
Revenue
Product revenue			$	2,778,725					$	2,017,042					$	1,935,493
Service revenue			1,004,020						866,631						842,503
Total revenue			3,782,745						2,883,673						2,777,996
Cost of product revenue			1,105,614						956,398						908,228
Cost of service revenue			567,254						531,220						528,829
Selling, general and administrative expenses			917,894						815,318						811,913
Research and development expenses			205,389						189,336						193,998
Restructuring and other costs, net			8,013						29,428						11,144
Operating income from continuing operations			978,581						361,973						323,884
Interest and other expense, net			72,217						124,831						66,201
Income from continuing operations before income taxes			906,364						237,142						257,683
Provision for income taxes			178,266						9,389						20,208
Income from continuing operations			728,098						227,753						237,475
Loss on disposition of discontinued operations before income taxes			(76)						—						(859)
Provision for (benefit from) income taxes on discontinued operations and dispositions			135						195						(1,311)
(Loss) gain from discontinued operations and dispositions			(211)						(195)						452
Net income			$	727,887					$	227,558					$	237,927
Basic earnings per share:
Income from continuing operations			$	6.53					$	2.06					$	2.15
(Loss) gain from discontinued operations and dispositions			(0.00)						0.00						0.00
Net income			$	6.53					$	2.06					$	2.15
Diluted earnings per share:
Income from continuing operations			$	6.50					$	2.04					$	2.13
(Loss) gain from discontinued operations and dispositions			(0.00)						0.00						0.00
Net income			$	6.49					$	2.04					$	2.13

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Fiscal Years Ended

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Net income			$	727,887					$	227,558					$	237,927
Other comprehensive income (loss)
Foreign currency translation adjustments, net of tax			169,500						(23,978)						(123,388)
Reclassification of taxes on foreign currency translation adjustments to earnings upon adoption of ASU 2018-02			—						—						(6,489)
Unrecognized prior service (cost) credit, net of tax			(1,799)						807						(77)
Unrealized (losses) gains on securities, net of tax			(16)						6						(9)
Other comprehensive income (loss)			167,685						(23,165)						(129,963)
Comprehensive income			$	895,572					$	204,393					$	107,964

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

CONSOLIDATED BALANCE SHEETS

As of the Fiscal Years Ended

			January 3, 2021						December 29, 2019
			(In thousands, except share and per share data)
Current assets:
Cash and cash equivalents			$	402,036					$	191,877
Accounts receivable, net			1,155,109						725,184
Inventories			514,567						356,937
Other current assets			167,208						100,381
Total current assets			2,238,920						1,374,379
Property, plant and equipment, net			368,304						318,223
Operating lease right-of-use assets			207,236						167,276
Intangible assets, net			1,365,693						1,283,286
Goodwill			3,447,114						3,111,227
Other assets, net			333,048						284,173
Total assets			$	7,960,315					$	6,538,564
Current liabilities:
Current portion of long-term debt			$	380,948					$	9,974
Accounts payable			327,325						235,855
Short-term accrued restructuring and other costs			4,716						11,559
Accrued expenses and other current liabilities			937,027						503,332
Current liabilities of discontinued operations			2,173						2,112
Total current liabilities			1,652,189						762,832
Long-term debt			1,609,701						2,064,041
Long-term liabilities			774,531						751,468
Operating lease liabilities			188,402						146,399
Total liabilities			4,224,823						3,724,740
Commitments and contingencies (see Notes 14 and 17)
Stockholders’ equity:
Preferred stock—$1 par value per share, authorized 1,000,000 shares; none issued or outstanding			—						—
Common stock—$1 par value per share, authorized 300,000,000 shares; issued and outstanding 112,090,000 and 111,140,000 shares at January 3, 2021 and December 29, 2019, respectively			112,090						111,140
Capital in excess of par value			148,101						90,357
Retained earnings			3,507,262						2,811,973
Accumulated other comprehensive loss			(31,961)						(199,646)
Total stockholders’ equity			3,735,492						2,813,824
Total liabilities and stockholders’ equity			$	7,960,315					$	6,538,564

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Fiscal Years Ended January 3, 2021

			Common Stock Amount						Capital in Excess of Par Value						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Total Stockholders’ Equity
			(In thousands)
Balance, December 31, 2017			$	110,361					$	58,828					$	2,380,517					$	(46,518)					$	2,503,188
Cumulative effect of adopting ASC 606			—						—						10,209						—						10,209
Impact of adopting ASU 2016-16			—						—						(2,062)						—						(2,062)
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 benefits			709						24,124						—						—						24,833
Issuance of common stock for employee stock purchase plans			21						1,464						—						—						1,485
Purchases of common stock			(717)						(56,676)						—						—						(57,393)
Issuance of common stock for long-term incentive program			223						15,650						—						—						15,873
Stock compensation			—						5,382						—						—						5,382
Balance, December 30, 2018			$	110,597					$	48,772					$	2,602,067					$	(176,481)					$	2,584,955
Impact of adopting ASC 842 (see Note 1)			—						—						13,289						—						13,289
Net income			—						—						227,558						—						227,558
Other comprehensive income			—						—						—						(23,165)						(23,165)
Dividends			—						—						(30,941)						—						(30,941)
Exercise of employee stock options and related income tax benefits			415						19,317						—						—						19,732
Issuance of common stock for employee stock purchase plans			33						2,743						—						—						2,776
Purchases of common stock			(67)						(6,246)						—						—						(6,313)
Issuance of common stock for long-term incentive program			162						19,145						—						—						19,307
Stock compensation			—						6,626						—						—						6,626
Balance, December 29, 2019			$	111,140					$	90,357					$	2,811,973					$	(199,646)					$	2,813,824
Impact of adopting ASU 2016-13 (see Note 1)			—						—						(1,328)						—						(1,328)
Net income			—						—						727,887						—						727,887
Other comprehensive income			—						—						—						167,685						167,685
Dividends			—						—						(31,270)						—						(31,270)
Exercise of employee stock options and related income tax benefits			764						36,907						—						—						37,671
Issuance of common stock for employee stock purchase plans			39						4,062						—						—						4,101
Purchases of common stock			(72)						(6,872)						—						—						(6,944)
Issuance of common stock for long-term incentive program			219						19,985						—						—						20,204
Stock compensation			—						3,662						—						—						3,662
Balance, January 3, 2021			$	112,090					$	148,101					$	3,507,262					$	(31,961)					$	3,735,492

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Fiscal Years Ende****d

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Operating activities:
Net income			$	727,887					$	227,558					$	237,927
Loss (gain) from discontinued operations and dispositions, net of income taxes			211						195						(452)
Income from continuing operations			728,098						227,753						237,475
Adjustments to reconcile income from continuing operations to net cash provided by continuing operations:
Restructuring and other costs, net			8,013						29,428						11,144
Depreciation and amortization			246,507						214,025						180,588
Stock-based compensation			29,126						31,514						28,767
Pension and other post-retirement expense			18,012						26,107						11,915
Change in fair value of contingent consideration			(8,827)						3,881						14,639
Deferred taxes			(29,121)						(61,353)						(51,103)
Contingencies and non-cash tax matters			4,518						(424)						(671)
Amortization of deferred debt issuance costs and accretion of discounts			3,391						3,846						3,341
Loss (gain) on disposition of businesses and assets, net			886						2,469						(12,844)
Amortization of acquired inventory revaluation			2,793						21,590						19,272
Asset impairment			7,937						—						—
Change in fair value of financial securities			(35)						(3,249)						—
Debt extinguishment costs			—						32,541						—
Gain on sale of investments, net			—						—						(557)
Changes in assets and liabilities which provided (used) cash, excluding effects from companies acquired:
Accounts receivable, net			(373,895)						(100,630)						(94,512)
Inventories			(122,513)						(9,607)						(30,183)
Accounts payable			62,753						7,351						8,900
Accrued expenses and other			314,534						(61,773)						(14,933)
Net cash provided by operating activities of continuing operations			892,177						363,469						311,238
Net cash used in operating activities of discontinued operations			—						—						(200)
Net cash provided by operating activities			892,177						363,469						311,038
Investing activities:
Capital expenditures			(77,506)						(76,331)						(93,253)
Purchases of investments			(20,059)						(6,387)						(7,019)
Purchases of licenses			—						(5,000)						—
Proceeds from disposition of businesses and assets			4,280						550						38,027
Proceeds from surrender of life insurance policies			282						—						72
Activity related to acquisitions, net of cash, cash equivalents and restricted cash acquired			(411,495)						(400,405)						(97,686)
Net cash used in investing activities of continuing operations			(504,498)						(487,573)						(159,859)
Net cash provided by investing activities of discontinued operations			—						—						—
Net cash used in investing activities			(504,498)						(487,573)						(159,859)

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Financing activities:
Payments on borrowings			(897,674)						(1,692,489)						(1,264,000)
Proceeds from borrowings			714,698						1,599,416						857,000
Payments of senior debt			—						(530,276)						—
Proceeds from sale of senior debt			—						847,195						369,340
Payments of debt financing costs			—						(9,879)						(2,634)
Net payments on other credit facilities			(4,494)						(14,975)						(28,383)
Settlement of cash flow hedges			(4,554)						(1,280)						(34,132)
Payments for acquisition-related contingent consideration			(10,363)						(29,942)						(12,800)
Proceeds from issuance of common stock under stock plans			37,671						19,732						24,833
Purchases of common stock			(6,944)						(6,313)						(57,445)
Dividends paid			(31,212)						(31,059)						(31,009)
Net cash (used in) provided by financing activities of continuing operations			(202,872)						150,130						(179,230)
Net cash used in financing activities of discontinued operations			—						—						—
Net cash (used in) provided by financing activities			(202,872)						150,130						(179,230)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			25,913						(447)						(8,004)
Net increase (decrease) in cash, cash equivalents and restricted cash			210,720						25,579						(36,055)
Cash, cash equivalents and restricted cash at beginning of year			191,894						166,315						202,370
Cash, cash equivalents and restricted cash at end of year			$	402,614					$	191,894					$	166,315
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 equivalents			402,036						191,877						163,111
Restricted cash included in other current assets			578						17						3,204
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows			$	402,614					$	191,894					$	166,315
Cash paid during the year for:
Interest			$	42,142					$	82,693					$	56,451
Income taxes			$	162,454					$	77,059					$	59,844

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. The fiscal year ended January 3, 2021 ("fiscal year 2020") included 53 weeks. Each of the fiscal years ended December 29, 2019 ("fiscal year 2019") and December 30, 2018 ("fiscal year 2018") included 52 weeks. The fiscal year ending January 2, 2022 ("fiscal year 2021") 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. See Note 2 below for additional details.

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 7 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.

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 AOCI, 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.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 13 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 19 below.

Marketable Securities and Investments: Investments in debt securities that are classified as available for sale are recorded at their fair values with unrealized gains and losses included in accumulated other comprehensive (loss) income until realized. Investments in equity securities are recorded at their fair values with unrealized holding gains and losses included in earnings. Investments in equity securities without a readily determinable fair value are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer, with changes included in earnings. Upon the Company's adoption of ASU 2019-04, beginning on December 30, 2019, equity investments without readily determinable fair value are carried at cost minus impairment, if any. When an observable price change in orderly transactions for the identical or a similar investment of the same issuer has occurred, the Company elects to carry those equity investments at fair value as of the date that the observable transaction occurred.

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 and Other Costs: 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 and other charges, as more fully described in Note 5 below, which include employee severance, other exit costs as well as costs of terminating certain lease agreements or contracts and other costs associated with relocating facilities. 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. Prior to adoption of Accounting Standards Codification ("ASC") 842, Leases, costs related to lease terminations were 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 ceased use.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

Leases: Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in the Company's consolidated balance sheet. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities were recognized based on the present value of the remaining lease payments over the lease term. When the Company's lease did not provide an implicit rate, the Company used its incremental borrowing rate in determining the present value of lease payments. The Company used the implicit rate when readily determinable. The operating lease ROU asset excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For certain equipment leases, such as cars, the Company accounts for the lease and non-lease components as a single lease component. Additionally, for certain equipment leases, the Company applies a portfolio approach to effectively account for the operating lease ROU assets and liabilities.

The Company has made an accounting policy election not to recognize ROU assets and lease liabilities that arise from short-term leases for facilities and equipment. Instead, the Company recognizes the lease payments in the consolidated statement of operations on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred.

As a lessor, the Company applies the practical expedient to not separate non-lease components from the associated lease component and instead accounts for those components as a single component if the non-lease components otherwise would be accounted for under ASC 606, Revenue From Contracts With Customers (“ASC 606”), and both of the following criteria are met: 1) the timing and pattern of transfer of the non-lease component or components and associated lease component are the same; and 2) the lease component, if accounted for separately, would be classified as an operating lease. If the non-lease component or components associated with the lease component are the predominant component of the combined component, the Company accounts for the combined component in accordance with ASC 606. Otherwise, the Company accounts for the combined component as an operating lease in accordance with ASC 842.

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 March 2020, the FASB issued Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). This update provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

reference rate expected to be discontinued because of reference rate reform. The following optional expedients for applying the requirements of certain Topics or Industry Subtopics in the FASB's ASC are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance: (1) modifications of contracts within the scope of Topic 310, Receivables, and Topic 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; and (2) modifications of contracts within the scope of Topic 840, Leases, and Topic 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate or remeasurements of lease payments. For other Topics or Industry Subtopics in the ASC, the amendments also include a general principle that permits an entity to consider contract modification due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. When elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions within the relevant Topic or Industry Subtopic. ASU 2020-04 is effective for any contract modifications or hedging relationships as of March 12, 2020 through December 31, 2022. In accordance with ASU 2020-04, the Company adopted the guidance as of March 12, 2020. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In March 2020, the FASB issued Accounting Standards Update No. 2020-03, Codification Improvements to Financial Instruments ("ASU 2020-03"). This guidance clarifies various ASC Topics related to financial instruments, including the following, among others: (1) Fair Value Option Disclosures: all entities are required to provide the fair value option disclosures in paragraphs 825-10-50-24 through 50-32 of the ASC; (2) Cross-Reference to Line-of-Credit or Revolving-Debt Arrangements Guidance in Subtopic 470-50, Modifications and Extinguishments: the amendments improve the understandability of the guidance; (3) Interaction of Topic 842 and Topic 326: the contractual term of a net investment in a lease determined in accordance with Topic 842, Leases should be the contractual term used to measure expected credit losses under Topic 326, Financial Instruments - Credit Losses; and (4) Interaction of Topic 326 and Subtopic 860-20: the amendments to Subtopic 860- 20 clarify that when an entity regains control of financial assets sold, an allowance for credit losses should be recorded in accordance with Topic 326. For Fair Value Option Disclosures and Cross-Reference to Line-of-Credit or Revolving-Debt Arrangements Guidance, the provisions are effective upon issuance of this guidance. For Interaction of Topic 842 and Topic 326 and Interaction of Topic 326 and 860-20, the effective dates and transition requirements for the amendments are the same as the effective dates and transition requirements in ASU 2016-13, as described below. In accordance with ASU 2020-03, the Company adopted the guidance as of April 5, 2020. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In January 2020, the FASB issued Accounting Standards Update No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 ("ASU 2020-01"). This guidance addresses the accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. The amendments clarify that: (a) an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method; and (b) an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option in accordance with the financial instruments guidance in Topic 825. The provisions of this guidance are to be applied prospectively upon their effective date. ASU 2020-01 is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those years. The standard was effective for the Company beginning on January 4, 2021, the first day of fiscal year 2021. The adoption is not expected to have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 eliminates certain exceptions and adds guidance to reduce complexity in accounting for income taxes. Specifically, this guidance: (1) removes the intraperiod tax allocation exception to the incremental approach; (2) removes the ownership changes in investments exception in determining when a deferred tax liability is recognized after an investor in a foreign entity transitions to or from the equity method of accounting and applies this provision on a modified retrospective basis through a cumulative-effect adjustment to retained earnings at the beginning of the period of adoption; and (3) removes the exception to using the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. ASU 2019-12 also simplifies accounting principles by making other changes, including requiring an entity to: (1) evaluate whether a step-up in tax basis of goodwill relates to a business combination or a separate transaction; (2) make a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and to apply this provision retrospectively to all periods presented; and (3) recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and apply this provision either retrospectively for all periods presented or on a modified retrospective basis through a cumulative-effect

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

adjustment to retained earnings as of the beginning of the period of adoption. The provisions of this guidance (except as specifically mentioned above) are to be applied prospectively upon their effective date. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those years. The standard was effective for the Company beginning on January 4, 2021, the first day of fiscal year 2021. The adoption is not expected to have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In April 2019, the FASB issued Accounting Standards Update No. 2019-04, Codification Improvem**ents to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments ("ASU 2019-04"). ASU 2019-04 clarifies certain aspects of previously issued accounting standards related to: (1) ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements ("ASU 2016-13"), in areas of accrued interest receivable, transfers of loans and debt securities between classifications, recoveries and prepayments, (2) ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"), in areas of partial-term fair value hedges, fair value hedge basis adjustments, certain disclosures and transition requirements and (3) ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"), in areas of remeasurement of equity securities under ASC 820, Fair Value Measurement, when using the measurement alternative and remeasurement of equity securities at historical exchange rates. The amendments related to ASU 2016-13 are required to be adopted in conjunction with that accounting standards update, as further described below. Since the Company has already adopted ASU 2017-12 and ASU 2016-01, the related amendments in ASU 2019-04 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted in any interim period. The amendments to ASU 2017-12 can either be adopted retrospectively as of the date of adoption of ASU 2017-12 or they can be adopted prospectively. The amendments to ASU 2016-01 are required to be applied using a modified-retrospective adoption approach with a cumulative-effect adjustment to retained earnings as of the date of adoption of ASU 2016-01, except for those related to equity securities without readily determinable fair values that are measured using the measurement alternative, which are required to be applied prospectively. The standard was effective for the Company beginning on December 30, 2019, the first day of the Company's fiscal year 2020. The Company applied the provisions of this guidance prospectively. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract ("ASU 2018-15"). ASU 2018-15 aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software (and hosting arrangements that include an internal-use software license). The provisions of this guidance are to be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The standard was effective for the Company beginning on December 30, 2019, the first day of the Company's fiscal year 2020. The Company applied the provisions of this guidance prospectively. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In August 2018, the FASB issued Accounting Standards Update No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14"). ASU 2018-14 adds, removes, and clarifies disclosure requirements related to defined benefit pension and other postretirement plans. ASU 2018-14 adds requirements for an entity to disclose the weighted-average interest crediting rates used in the entity’s cash balance pension plans and other similar plans; and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period*.* Further, ASU 2018-14 removes guidance that currently requires the following disclosures: the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year; the amount and timing of plan assets expected to be returned to the employer; information about (1) benefits covered by related-party insurance and annuity contracts and (2) significant transactions between the plan and related parties; and the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost, and the benefit obligation for postretirement health care benefits. ASU 2018-14 also clarifies the guidance in Compensation-Retirement Benefits (Topic 715-20-50-3) on defined benefit plans to require disclosure of (1) the projected benefit obligation ("PBO") and fair value of plan assets for pension plans with PBOs in excess of plan assets (the same disclosure with reference to the accumulated postretirement benefit obligation rather than the PBO is required for other postretirement benefit plans) and (2) the accumulated benefit obligation ("ABO") and fair value of plan assets for pension plans with ABOs in excess of plan assets. The provisions of this guidance are to be applied retrospectively to all periods presented upon their effective date. ASU 2018-14 is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those years with early adoption permitted. The standard was effective for the Company beginning on January 4, 2021, the first day of fiscal year 2021. The adoption is not expected to have a material impact on the Company's consolidated financial position, results of operations and cash flows.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). ASU 2018-13 adds, removes, and modifies certain disclosures related to fair value measurements. ASU 2018-13 adds requirements for an entity to disclose the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. Further, ASU 2018-13 removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. ASU 2018-13 also modifies existing disclosure requirements related to measurement uncertainty. The amendments regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments are to be applied retrospectively to all periods presented upon their effective date. The standard was effective for the Company beginning on December 30, 2019, the first day of the Company's fiscal year 2020. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard requires entities to use the expected loss impairment model and will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance sheet credit exposures. Entities are required to estimate the lifetime “expected credit loss” for each applicable financial asset and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard also amends the impairment model for available-for-sale (“AFS”) debt securities and requires entities to determine whether all or a portion of the unrealized loss on an AFS debt security is a credit loss. An entity will recognize an allowance for credit losses on an AFS debt security as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment. The provisions of this guidance are to be applied using a modified-retrospective approach. A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. Subsequent to the issuance of ASU 2016-13, in November 2018, the FASB issued Accounting Standards Update No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses ("ASU 2018-19"), in April 2019, the FASB issued ASU 2019-04, and in May 2019, the FASB issued Accounting Standards Update No. 2019-05, Financial Instruments - Credit Losses (Topic 326), Targeted Transition Relief ("ASU 2019-05"). The amendments in ASU 2018-19 clarify that receivables arising from operating leases are not within the scope of Subtopic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. The amendments in ASU 2019-04 clarify the measurement of allowance for credit losses on accrued interest receivable; the inclusion of expected recoveries in the allowance for credit losses; the permission of a prepayment-adjusted effective interest rate when determining the allowance for credit losses; and the steps entities should take when recording the transfer of loans or debt securities between measurement classifications. The amendments in ASU 2019-05 provide an option to irrevocably elect the fair value option in Subtopic 825-10, Financial Instruments-Overall, on an instrument-by-instrument basis, for eligible financial assets measured at amortized cost basis upon adoption of ASU 2016-13, but this fair value option election does not apply to held-to-maturity debt securities. The effective date and transition requirements for the amendments in ASU 2018-19, ASU 2019-04 and ASU 2019-05 are the same as the effective date and transition requirements of ASU 2016-13, which is effective for annual reporting periods beginning after December 15, 2019, and interim periods within those years. The standards were effective for the Company beginning on December 30, 2019, the first day of the Company's fiscal year 2020. The Company adopted these standards using the modified-retrospective approach. The adoption of the standard resulted in a decrease in retained earnings at December 30, 2019 of approximately $1.3 million from the cumulative effect of initially applying the standards as of that date. In addition, the adoption of the standard resulted in an increase in reserve for doubtful accounts of $1.7 million and an increase in deferred tax assets of $0.4 million from the tax impact of the cumulative adjustments. The adoption did not have an impact on cash from or used in operating, investing or financing activities in the Company's consolidated statement of cash flows at December 30, 2019.

Note 2: Revenue

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 24.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

i. Discovery & Analytical Solutions

The Discovery & Analytical Solutions 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 services			Nature, timing of satisfaction of performance obligations, and significant payment terms
Instruments			For 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 reagents			The 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 subscriptions			Customers 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. Subscription contracts are typically billed annually on the anniversary date of the contract. Software subscriptions and maintenance service contracts are non-cancelable.
Cloud services			Cloud 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 warranty			The 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 training			The 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.

Products and services			Nature, timing of satisfaction of performance obligations, and significant payment terms
Instruments			For 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 reagents			The 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.
Solutions			When 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Extended warranty			The 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.
Services			The Company's service offerings include genetic testing, COVID-19 testing, cord blood processing and storage, and training. The Company recognizes revenue for the genetic testing, 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 genetic testing and cord blood processing, customers pay the fee in full at the point of sale. The 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. In August 2020, the Company entered into a contract with the State of California to perform COVID-19 testing for a term of 14 months with automatic renewal for two successive terms of one year unless the State of California provides notice of termination within 90 days prior to expiration of the current term. The Company has determined that providing monthly testing capacity and individual tests are two separate performance obligations. The pricing in the contract is variable based on the testing capacity and the number of testing results provided in a month. The customer is entitled to a credit on previous tests such that, at the conclusion of the contract, the customer will pay, on average, the price per test result based on the highest volume. The Company allocates the contract consideration to each of these performance obligations based on estimated stand-alone selling price. As the stand-alone selling price is not directly observable, the Company estimates stand-alone selling prices based on the expected cost plus margin approach. The Company recognizes revenue for the monthly testing capacity on a per day basis once the Company has confirmed that it has met the requested capacity level. The Company recognizes revenue for the individual tests as the tests are performed. The amount recognized per test is based on the Company's forecast of tests to be performed per month over the contract period. The contract includes upfront prepayments based on completion of milestones that are non-refundable except due to breach of contract. These prepayments are recorded as contract liabilities and will be recognized as revenue on a per test basis. Monthly testing capacity is billed one month in advance and individual tests are billed monthly for the duration of the contract. Payment terms are net 45 days from invoice date.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

			Reportable Segments
			For the fiscal year ended
			January 3, 2021																		December 29, 2019
			Discovery & Analytical Solutions						Diagnostics						Total						Discovery & Analytical Solutions						Diagnostics						Total
			(In thousands)
Primary geographical markets
Americas			$	695,960					$	750,641					$	1,446,601					$	717,205					$	401,591					$	1,118,796
Europe			490,789						864,687						1,355,476						495,768						291,610						787,378
Asia			529,054						451,614						980,668						533,188						444,311						977,499
			$	1,715,803					$	2,066,942					$	3,782,745					$	1,746,161					$	1,137,512					$	2,883,673
Primary end-markets
Diagnostics			$	—					$	2,066,942					$	2,066,942					$	—					$	1,137,512					$	1,137,512
Life sciences			1,032,209						—						1,032,209						977,200						—						977,200
Applied markets			683,594						—						683,594						768,961						—						768,961
			$	1,715,803					$	2,066,942					$	3,782,745					$	1,746,161					$	1,137,512					$	2,883,673
Timing of revenue recognition
Products and services transferred at a point in time			$	1,195,249					$	1,891,482					$	3,086,731					$	1,276,499					$	1,053,974					$	2,330,473
Services transferred over time			520,554						175,460						696,014						469,662						83,538						553,200
			$	1,715,803					$	2,066,942					$	3,782,745					$	1,746,161					$	1,137,512					$	2,883,673

Contract Balances

Contract assets: The unbilled receivables (contract assets) primarily relate to the Company's right to consideration for work completed but not billed at the reporting date. The unbilled receivables are transferred to trade receivables when billed to customers. Contract assets are generally classified as current assets and are included in "Accounts receivable, net" in the consolidated balance sheets. The balances of contract assets as of January 3, 2021 and December 29, 2019 were $59.5 million and $37.0 million, respectively. The amount of unbilled receivables recognized at the beginning of fiscal year 2020 that were transferred to trade receivables during the fiscal year ended January 3, 2021 was $33.2 million. The increase in unbilled receivables during the fiscal year ended January 3, 2021 as a result of recognition of revenue before billing to customers, excluding amounts transferred to trade receivables during the period, amounted to $55.7 million. The amount of unbilled receivables recognized at the beginning of fiscal year 2019 that were transferred to trade receivables during the fiscal year ended December 29, 2019 was $17.3 million. The increase in unbilled receivables during the fiscal year ended December 29, 2019 as a result of recognition of revenue before billing to customers, excluding amounts transferred to trade receivables during the period, amounted to $22.4 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 "Accrued expenses and other current liabilities" or as long-term in "Long-term liabilities" in the consolidated balance sheets based on the timing of when the Company expects to recognize revenue. The balances of contract liabilities as of January 3, 2021 and December 29, 2019 were $238.1 million and $29.9 million, respectively. The increase in contract liabilities during the fiscal year ended January 3, 2021 due to cash received, excluding amounts recognized as revenue during the period, was $235.5 million. The amount of revenue recognized during the fiscal year ended January 3, 2021 that was included in the contract liability balance at the beginning of the period was $27.3 million. The increase in contract liabilities during the fiscal year ended December 29, 2019 due to cash received, excluding amounts recognized as revenue during the period, was $20.4 million. The amount of revenue recognized during the fiscal year ended December 29, 2019 that was included in the contract liability balance at the beginning of the period was $21.2 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. These costs include the Company's internal sales force compensation program, as the Company determined that annual compensation is commensurate with annual sales activities.

Transaction price allocated to the remaining performance obligations

The Company applies the practical expedient in ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The estimated revenue expected to be recognized beyond one year in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the period are not material to the Company. The remaining performance obligations primarily include noncancelable purchase orders and noncancelable software subscriptions and cloud service contracts.

Note 3: Business Combinations

Acquisitions in fiscal year 2020

During the fiscal year 2020, the Company completed the acquisition of four businesses for aggregate consideration of $438.7 million. The acquired businesses include Horizon Discovery Group plc (“Horizon”), a company based in Cambridge, UK with approximately 400 employees, which was acquired on December 23, 2020 for a total consideration of $399.4 million (£296.0 million), and three other businesses which were acquired for a total consideration of $39.3 million. The excess of the purchase prices over the fair values of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforces acquired, and has been allocated to goodwill, which is not tax deductible. The Company has reported the operations for these acquisitions within the results of the Company's Diagnostics and Discovery & Analytical Solutions segments, as applicable, from the acquisition dates. Identifiable definite-lived intangible assets, such as core technology, trade names, customer relationships and IPR&D, acquired as part of these acquisitions had a weighted average amortization period of 11.0 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The total purchase price for the acquisitions in fiscal year 2020 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:

			Preliminary
			Horizon						Other
			(In thousands)
Fair value of business combination:
Cash payments			$	399,005					$	38,243
Other liability			396						1,263
Working capital and other adjustments			—						(176)
Less: cash acquired			(25,539)						(1,300)
Total			$	373,862					$	38,030
Identifiable assets acquired and liabilities assumed:
Current assets			$	29,762					$	5,770
Property, plant and equipment			17,729						2,673
Other assets			17,743						371
Identifiable intangible assets:
Core technology			60,000						5,730
Trade names			4,900						680
Customer relationships			96,600						10,923
IPR&D			10,800						—
Goodwill			200,745						16,224
Deferred taxes			(22,480)						(1,132)
Deferred revenue			(2,031)						—
Debt assumed			—						(29)
Liabilities assumed			(39,906)						(3,180)
Total			$	373,862					$	38,030

Acquisitions in fiscal year 2019

During the fiscal year 2019, the Company completed the acquisition of five businesses for aggregate consideration of $433.1 million. The acquired businesses include Cisbio Bioassays SAS (“Cisbio”), a company based in Codolet, France, which was acquired for a total consideration of $219.9 million, Shandong Meizheng Bio-Tech Co., Ltd. ("Meizheng Group"), a company headquartered in Beijing, China, for a total consideration of $166.5 million, and three other businesses which were acquired for a total consideration of $46.6 million. The Company has a potential obligation to pay the former shareholders of certain of these acquired businesses additional contingent consideration of up to $31.8 million. The excess of the purchase prices over the fair values of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforces acquired, and has been allocated to goodwill, which is not tax deductible. The Company has reported the operations for these acquisitions within the results of the Company's Diagnostics and Discovery & Analytical Solutions segments, as applicable, from the acquisition dates. Identifiable definite-lived intangible assets, such as core technology, trade names and customer relationships, acquired as part of these acquisitions had a weighted average amortization period of 11.0 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The total purchase price for the acquisitions in fiscal year 2019 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:

			Cisbio						Meizheng Group						Other
			(In thousands)
Fair value of business combination:
Cash payments			$	219,795					$	145,000					$	45,042
Other liability			—						6,446						638
Contingent consideration			—						12,100						634
Working capital and other adjustments			138						2,961						302
Less: cash acquired			(12,542)						(2,108)						(1,334)
Total			$	207,391					$	164,399					$	45,282
Identifiable assets acquired and liabilities assumed:
Current assets			$	43,554					$	15,077					$	4,125
Property, plant and equipment			4,835						6,278						727
Other assets			100						24						502
Identifiable intangible assets:
Core technology			89,000						36,600						27,667
Trade names			5,000						4,900						1,310
Customer relationships			39,000						55,800						6,700
Goodwill			73,417						78,612						17,079
Deferred taxes			(34,962)						(21,548)						(6,603)
Debt assumed			—						(706)						(2,698)
Liabilities assumed			(12,553)						(10,638)						(3,527)
Total			$	207,391					$	164,399					$	45,282

Acquisitions in fiscal year 2018

During fiscal year 2018, the Company completed the acquisition of four businesses for aggregate consideration of $105.8 million. The excess of the purchase prices over the fair values of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforces acquired, and has been allocated to goodwill, which is not tax deductible. The Company has reported the operations for these acquisitions within the results of the Company's Diagnostics and Discovery & Analytical Solutions segments 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:

			(In thousands)
Fair value of business combination:
Cash payments			$	95,950
Other liability			3,354
Contingent consideration			6,200
Working capital and other adjustments			261
Less: cash acquired			(1,132)
Total			$	104,633
Identifiable assets acquired and liabilities assumed:
Current assets			$	4,905
Property, plant and equipment			1,166
Other assets			776
Identifiable intangible assets:
Core technology			31,956
Trade names			1,070
GC Libraries			2,065
Customer relationships			10,200
Goodwill			65,886
Deferred taxes			(9,049)
Debt assumed			(461)
Liabilities assumed			(3,881)
Total			$	104,633

The Company does not consider the acquisitions completed during fiscal years 2020, 2019 and 2018 to be material to its consolidated results of operations; therefore, the Company is not presenting pro forma financial information of operations for these acquisitions. The aggregate revenue and the results of operations for the acquisitions completed during fiscal year 2020 for the period from their acquisition dates to January 3, 2021 were not material. The aggregate revenue and the results of operations for the acquisitions completed during fiscal year 2019 for the period from their acquisition dates to December 29, 2019 were not material. The aggregate revenue for the acquisitions completed during fiscal year 2018 for the period from their acquisition dates to December 30, 2018 were not material. 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 January 3, 2021, the allocations of purchase prices for acquisitions completed in fiscal years 2019 and 2018 were final. The preliminary allocations of the purchase prices for acquisitions completed in fiscal year 2020 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 2020, the Company obtained information relevant to determining the fair values of certain tangible and intangible assets acquired, and liabilities assumed, related to recent acquisitions and adjusted its purchase price allocations. Based on this information, the Company recognized an increase in intangible assets of $1.9 million, an increase in deferred tax liabilities of $0.4 million, a decrease in goodwill of $1.8 million, and a decrease in liabilities assumed of $0.4 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 January 3, 2021, the Company may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $7.3 million. As of January 3, 2021, the Company has recorded contingent consideration obligations of $3.0 million, of which $2.9 million was recorded in accrued expenses and other current liabilities, and $0.1 million was recorded in long-term liabilities. As of December 29, 2019, the Company has recorded contingent consideration obligations of $35.5 million, of which $20.8 million was recorded in accrued expenses and other current liabilities, and $14.7 million was recorded in long-term liabilities. The expected maximum earnout period for acquisitions with open contingency periods does not exceed 2.9 years from January 3, 2021, and the remaining weighted average expected earnout period at January 3, 2021 was 1.9 years. 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 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 for fiscal years 2020 and 2019 were $9.3 million and $6.6 million, respectively. These amounts included $4.7 million of incentive award associated with the Company's acquisition of Meizheng Group for fiscal year 2020, and $0.5 million of compensation expense related to Tulip Diagnostics Private Limited ("Tulip") and $2.6 million of net foreign exchange loss related mainly to the Company's acquisition of Cisbio for fiscal year 2019. Acquisition-related interest expenses was $0.5 million in fiscal year 2020. These acquisition and divestiture-related costs were expensed as incurred and recorded in selling, general and administrative expenses and interest and other expense, net in the Company's consolidated statements of operations.

Note 4: 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 January 3, 2021 and December 29, 2019.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Loss on disposition of the Medical Imaging business			$	—					$	—					$	(793)
Loss on disposition of Fluid Sciences business			(76)						—						(66)
Loss on disposition of discontinued operations before income taxes			$	(76)					$	—					$	(859)

During 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 Discovery & Analytical Solutions 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.

The Company recorded a provision for (benefit from) income taxes of $0.1 million, $0.2 million and $(1.3) million on discontinued operations and dispositions in fiscal years 2020, 2019 and 2018, respectively.

Note 5: Restructuring and Other Costs, Net

The Company has undertaken a series of restructuring actions related to the impact of acquisitions and divestitures, the alignment of the Company's operations with its growth strategy, the integration of its business units and its productivity initiatives. The activities associated with these plans have been reported as restructuring and other costs, net, as applicable, and are included as a component of income from continuing operations. The current portion of restructuring and other costs is recorded in short-term accrued restructuring and other costs, accrued expense and other current liabilities, and operating lease right-of-use-assets. The long-term portion of restructuring and other costs is recorded in operating lease liabilities and long-term liabilities.

The Company implemented a restructuring plan in the first quarter of fiscal year 2020 consisting of workforce reductions and closure of excess facilities principally intended to realign resources to emphasize growth initiatives (the "Q1 2020 Plan"). The Company implemented a restructuring plan in the third quarter of fiscal year 2020 consisting of workforce reductions principally intended to realign resources to emphasize growth initiatives ("Q3 2020 Plan"). The Company implemented a restructuring plan in each quarter of fiscal year 2019 consisting of workforce reductions principally intended to realign resources to emphasize growth initiatives (the "Q1 2019 Plan", "Q2 2019 Plan", "Q3 2019 Plan" and "Q4 2019 Plan", respectively). 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). All other previous restructuring plans were workforce reductions or the closure of excess facility space principally intended to integrate the Company's businesses in order to realign operations, reduce costs, achieve operational efficiencies and shift resources into geographic regions and end markets that are more consistent with the Company's growth strategy (the "Previous Plans").

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 2020, 2019 and 2018 in continuing operations:

			Workforce Reductions																		Closure of Excess Facility												Total						(Expected) Date Payments Substantially Completed by
			Headcount Reduction						Diagnostics						Discovery & Analytical Solutions						Diagnostics						Discovery & Analytical Solutions									Severance						Excess Facility
			(In thousands, except headcount data)
Q3 2020 Plan			23						$	901					$	2,080					$	—					$	—					$	2,981					Q2 FY2021						—
Q1 2020 Plan			32						1,134						2,312						682						92						4,220						Q4 FY2020						Q1 FY2022
Q4 2019 Plan			22						2,404						177						—						—						2,581						Q3 FY2020						—
Q3 2019 Plan			259						2,641						11,156						—						—						13,797						Q2 FY2020						—
Q2 2019 Plan			44						1,129						4,461						—						—						5,590						Q1 FY2020						—
Q1 2019 Plan			105						1,459						6,001						—						—						7,460						Q4 FY2019						—
Q4 2018 Plan			1						—						348						—						—						348						Q1 FY2019						—
Q3 2018 Plan			61						618						1,146						—						—						1,764						Q4 FY2019						—
Q1 2018 Plan			47						902						5,096						—						—						5,998						Q4 FY2019						—

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 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 $0.2 million, $0.2 million, $5.0 million in the Discovery & Analytical Solutions segment during fiscal years 2020, 2019 and 2018, respectively, and $0.1 million and $0.2 million during fiscal years 2020 and 2019, respectively, in the Diagnostics segment as a result of these contract terminations.

The Company recorded pre-tax charges of $4.3 million and $0.8 million associated with relocating facilities during fiscal years 2020 and 2019. The Company expects to make payments on these relocation activities through fiscal year 2021.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At January 3, 2021, the Company had $8.3 million recorded for accrued restructuring and other costs, of which $4.7 million was recorded in short-term accrued restructuring and other costs, $0.3 million was recorded in operating lease right-of-use assets, $2.0 million was recorded in accrued expenses and other current liabilities, and $1.3 million was recorded in operating lease liabilities. At December 29, 2019, the Company had $13.9 million recorded for accrued restructuring and other costs, of which $11.6 million was recorded in short-term accrued restructuring and other costs, $0.4 million was recorded in accrued expenses and other current liabilities, $0.8 million was recorded in long-term liabilities, and $1.1 million was recorded in operating lease liabilities. The following table summarizes the Company's restructuring accrual balances and related activity by restructuring plan, as well as other accrual balances and related activity, during fiscal years 2020, 2019 and 2018 in continuing operations:

						Balance at December 31, 2017						2018 Charges and Changes in Estimates, Net						2018 Amounts Paid						Balance at December 30, 2018						2019 Charges and Changes in Estimates, Net						2019 Amounts Paid						Balance at December 29, 2019						2020 Charges and Changes in Estimates, Net						2020 Amounts Paid						Balance at January 3, 2021
Severance:
Q3 2020 Plan						$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	2,981					$	(1,814)					$	1,167
Q1 2020 Plan						—						—						—						—						—						—						—						3,446						(2,574)						872
Q4 2019 Plan(1)						—						—						—						—						2,581						(1,692)						889						(386)						(454)						49
Q3 2019 Plan(2)						—						—						—						—						13,797						(7,486)						6,311						(2,025)						(2,779)						1,507
Q2 2019 Plan(3)						—						—						—						—						5,590						(3,701)						1,889						(376)						(1,241)						272
Q1 2019 Plan(4)						—						—						—						—						7,483						(5,354)						2,129						(867)						(669)						593
Q4 2018 Plan						—						348						—						348						3						(351)						—						—						—						—
Q3 2018 Plan						—						2,054						(639)						1,415						(77)						(1,314)						24						—						—						24
Q1 2018 Plan(5)						—						5,998						(4,389)						1,609						(1,069)						(282)						258						(255)						—						3
Facility:
Q1 2020 Plan						—						—						—						—						—						—						—						774						(380)						394
Previous Plans(6)						10,921						(1,998)						(6,252)						2,671						(159)						(1,147)						1,365						219						(482)						1,102
Restructuring						10,921						6,402						(11,280)						6,043						28,149						(21,327)						12,865						3,511						(10,393)						5,983
Contract Termination						3,048						4,742						(7,653)						137						452						(401)						188						212						(82)						318
Other Costs						—						—						—						—						827						—						827						4,290						(3,119)						1,998
Total Restructuring and Other Liabilities						$	13,969					$	11,144					$	(18,933)					$	6,180					$	29,428					$	(21,728)					$	13,880					$	8,013					$	(13,594)					$	8,299

---

(1)During fiscal year 2020, the Company recognized pre-tax restructuring reversals of $0.3 million in the Discovery & Analytical Solutions segment and $0.1 million in the Diagnostics segment related to lower than expected costs associated with workforce reductions for the Q4 2019 Plan.

(2) During fiscal year 2020, the Company recognized pre-tax restructuring reversals of $1.9 million in the Discovery & Analytical Solutions segment and $0.1 million in the Diagnostics segment related to lower than expected costs associated with workforce reductions for the Q3 2019 Plan.

(3)During fiscal year 2020, the Company recognized pre-tax restructuring reversals of $0.4 million in the Discovery & Analytical Solutions segment related to lower than expected costs associated with workforce reductions for the Q2 2019 Plan.

(4)During fiscal year 2020, the Company recognized pre-tax restructuring reversals of $0.9 million in the Discovery & Analytical Solutions segment related to lower than expected costs associated with workforce reductions for the Q1 2019 Plan.

(5)During fiscal year 2020, the Company recognized pre-tax restructuring reversals of $0.2 million in the Discovery & Analytical Solutions segment and $0.1 million in the Diagnostics segment related to lower than expected costs associated with workforce reductions for the Q1 2018 Plan.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(6)During fiscal year 2020, the Company recognized pre-tax restructuring reversals of $0.1 million in each of the Discovery & Analytical Solutions and Diagnostics segments related to lower than expected costs associated with workforce reductions for the Previous Plans.

Note 6: Interest and Other Expense, Net

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

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Interest income			$	(1,010)					$	(1,495)					$	(1,141)
Interest expense			49,712						63,627						66,976
Loss (gain) on disposition of businesses and assets, net (see Note 4)			—						2,469						(12,844)
Debt extinguishment costs (see Note 14)			—						32,541						—
Other expense, net			23,515						27,689						13,210
Total interest and other expense, net			$	72,217					$	124,831					$	66,201

Foreign currency transaction (gains) losses were $(2.7) million, $6.5 million and $(9.4) million in fiscal years 2020, 2019 and 2018, respectively. Net losses (gains) from forward currency hedge contracts were $7.7 million, $(3.5) million and $11.7 million in fiscal years 2020, 2019 and 2018, respectively. The other components of net periodic pension cost were $18.8 million, $25.3 million and $11.5 million in fiscal years 2020, 2019 and 2018, respectively. These amounts were included in other expense, net.

Note 7: 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:

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Unrecognized tax benefits, beginning of year			$	35,547					$	33,009					$	30,308
Gross increases—tax positions in prior periods			4,974						4,433						6,931
Gross decreases—tax positions in prior periods			(2,471)						(2,183)						(1,622)
Gross increases—current-period tax positions			309						152						—
Settlements			—						(45)						(2,253)
Lapse of statute of limitations			—						—						(181)
Foreign currency translation adjustments			414						181						(174)
Unrecognized tax benefits, end of year			$	38,773					$	35,547					$	33,009

The Company classifies interest and penalties as a component of income tax expense. At January 3, 2021 and December 29, 2019, the Company had accrued interest and penalties of $5.8 million and $4.1 million, respectively. During fiscal years 2020, 2019 and 2018, the Company recognized a net expense of $4.7 million, $1.6 million and $0.4 million, respectively, for interest and penalties in its total tax provision which includes settlements and statutes of limitations that had lapsed. At January 3, 2021, the Company had gross tax effected unrecognized tax benefits of $38.8 million, of which $37.1 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 $0.2 million of its uncertain tax positions at January 3, 2021, including accrued interest and penalties, and net of tax benefits, may be resolved over the next twelve months

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 China, Finland, Germany, Luxembourg, The Netherlands, Singapore, the United Kingdom and the United States. The tax years under examination vary by jurisdiction.

During fiscal year 2020, the Company recorded net discrete income tax expense of $10.8 million, which primarily consisted of a $15.2 million assessment related to foreign entities for which the Company had previously believed, in error, that the relevant tax authority had granted fiscal unity to consolidate in fiscal years 2019 and 2018. The Company determined that this is not material to any of the previous periods or the current fiscal year. The Company filed an appeal for relief on this matter with the foreign tax authority but cannot be assured of a favorable outcome and has therefore recorded the full impact in the current year’s tax provision as a result of not being granted fiscal unity in fiscal years 2019 and 2018. The Company also provided for interest on uncertain tax positions of $4.5 million, foreign tax rate changes of $2.5 million, return to provision adjustments of $1.2 million and other tax matters of $1.6 million, offset by recognition of excess tax benefits on stock compensation of $11.7 million and a valuation allowance reversal of $2.5 million. During fiscal years 2019 and 2018, the Company recorded net discrete income tax benefits of $23.4 million and $8.1 million, respectively. The $23.4 million tax benefits in fiscal year 2019 was primarily due to a valuation allowance reversal of $12.3 million, recognition of excess tax benefits on stock compensation of $4.9 million, return to provision adjustments of $6.7 million and benefits from tax elections made during fiscal year 2019 of $3.7 million, partially offset by a tax expense of $2.7 million related to the one-time transition tax under the Tax Cut and Jobs Act ("Tax Act") and additional discrete expense of $1.4 million expense related to other tax matters. The $8.1 million of tax benefits in fiscal year 2018 was primarily due to a discrete benefit of $7.2 million related to the recognition of excess tax benefits on stock compensation, along with an additional discrete benefit of $2.0 million as a result of the Tax Act, partially offset by discrete benefits of $1.1 million related to other tax matters.

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

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
U.S.			$	183,452					$	29,252					$	32,627
Non-U.S.			722,912						207,890						225,056
Total			$	906,364					$	237,142					$	257,683

On a U.S. income tax basis, the Company has reported significant taxable income over the three-year period ended January 3, 2021. 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 Expense						Deferred Expense (Benefit)						Total
			(In thousands)
Fiscal year ended January 3, 2021
Federal			$	21,262					$	15,951					$	37,213
State			13,688						(967)						12,721
Non-U.S.			172,437						(44,105)						128,332
Total			$	207,387					$	(29,121)					$	178,266
Fiscal year ended December 29, 2019
Federal			$	3,735					$	(267)					$	3,468
State			4,425						(1,574)						2,851
Non-U.S.			62,582						(59,512)						3,070
Total			$	70,742					$	(61,353)					$	9,389
Fiscal year ended December 30, 2018
Federal			$	7,938					$	(5,250)					$	2,688
State			2,345						2,572						4,917
Non-U.S.			61,028						(48,425)						12,603
Total			$	71,311					$	(51,103)					$	20,208

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

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Continuing operations			$	178,266					$	9,389					$	20,208
Discontinued operations			135						195						(1,311)
Total			$	178,401					$	9,584					$	18,897

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:

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Tax at statutory rate			$	190,339					$	49,799					$	54,114
Non-U.S. rate differential, net			(40,216)						(32,124)						(27,281)
U.S. taxation of multinational operations			9,050						4,251						7,047
State income taxes, net			13,306						1,941						2,028
Prior year tax matters			8,262						(5,103)						1,124
Effect of stock compensation			(8,818)						(2,053)						(6,331)
General business tax credits			(4,136)						(4,325)						(3,738)
Change in valuation allowance			10						(1,117)						(759)
Foreign consolidations			15,222						—						—
Tax elections			—						(3,700)						—
Impact of U.S. Tax Act			—						2,718						(2,025)
Others, net			(4,753)						(898)						(3,971)
Total			$	178,266					$	9,389					$	20,208

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 Finland, Singapore and the United Kingdom in fiscal year 2020 and Finland, Singapore and The Netherlands in fiscal years 2019 and 2018, which are taxed at rates lower than the U.S. federal statutory rate, resulting in a benefit from income taxes of $42.5 million in fiscal year 2020, $16.7 million in fiscal year 2019 and $18.7 million in fiscal year 2018. These amounts include $21.8 million in fiscal year 2020, $10.4 million in fiscal year 2019 and $10.3 million in fiscal year 2018 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 2020 was $0.20 and $0.19, respectively, for fiscal year 2019 was $0.09 and $0.09, respectively, and for fiscal year 2018 was $0.09 and $0.09, respectively. The tax holiday in China is renewed every three years. The Company expects to renew the tax holiday for two of the Company's subsidiaries in China that expired in fiscal year 2020. The tax holiday for 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 January 3, 2021 and December 29, 2019 were as follows:

			January 3, 2021						December 29, 2019
			(In thousands)
Deferred tax assets:
Inventory			$	4,788					$	4,662
Reserves and accruals			51,107						46,817
Accrued compensation			20,881						18,953
Net operating loss and credit carryforwards			131,884						116,751
Accrued pension			34,192						35,890
Restructuring reserve			1,579						2,983
Deferred revenue			29,838						30,412
Operating lease liabilities			42,220						46,477
Unrealized foreign exchange loss			21,614						—
Total deferred tax assets			338,103						302,945
Deferred tax liabilities:
Postretirement health benefits			(8,168)						(4,106)
Depreciation and amortization			(355,876)						(330,768)
Operating lease right-of-use assets			(38,598)						(42,774)
All other, net			(4,160)						(1,780)
Total deferred tax liabilities			(406,802)						(379,428)
Valuation allowance			(99,740)						(88,449)
Net deferred tax liabilities			$	(168,439)					$	(164,932)

The components of net deferred tax liabilities as of January 3, 2021 and December 29, 2019 were recognized in the consolidated balance sheets as follows:

			January 3, 2021						December 29, 2019
			(In thousands)
Other assets, net			$	65,518					$	60,004
Long-term liabilities			(233,957)						(224,936)
Total			$	(168,439)					$	(164,932)

At January 3, 2021, for income tax return purposes, the Company had U.S. federal net operating loss carryforwards of $36.6 million, state net operating loss carryforwards of $11.5 million, foreign net operating loss carryforwards of $495.3 million, state tax credit carryforwards of $15.3 million, general business tax credit carryforwards of $0.3 million, and foreign tax credit carryforwards of $0.1 million. These are subject to expiration in years ranging from 2021 to 2038, and without expiration for certain foreign net operating loss carryforwards and certain state credit carryforwards.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Valuation allowances take into consideration limitations imposed upon the use of the tax attributes and reduce the value of such items to the likely net realizable amount. The Company regularly evaluates positive and negative evidence available to determine if valuation allowances are required or if existing valuation allowances are no longer required. Valuation allowances have been provided on state net operating loss and state tax credit carryforwards and on certain foreign tax attributes that the Company has determined are not more likely than not to be realized. The increase in the valuation allowance of $11.3 million in fiscal year 2020 is primarily due to a net build of tax attributes related to the generation and utilization of net operating loss carryforwards by some of the Company's non-U.S. subsidiaries, as well as realization of certain U.S. state tax credit carryforwards.

The components of net deferred tax (liabilities) assets as of January 3, 2021 and December 29, 2019 were as follows:

			January 3, 2021						December 29, 2019
			(In thousands)
U.S.			$	50,302					$	43,683
Non-U.S.			(218,741)						(208,615)
Total			$	(168,439)					$	(164,932)

Prior to enactment of the Tax Act, the Company did not provide deferred income tax expense on the cumulative undistributed earnings of its international subsidiaries. The Tax Act required the Company to accrue a one-time transition tax on the unremitted earnings of its foreign subsidiaries. At December 31, 2017, the Company recorded an income tax expense of $85.0 million in continuing operations in accordance with the Tax Act. The U.S. Treasury issued regulations in 2019 and accordingly the Company refined its calculations of the one-time transition tax and recorded a tax expense (benefit) of $2.7 million and $(4.6) million during fiscal years 2019 and 2018, respectively. At the end of fiscal year 2020, the Company evaluated its undistributed foreign earnings and identified certain earnings that it no longer considered indefinitely reinvested and therefore recognized $1.6 million of income tax expense during the year. The Company's intent is to continue to reinvest the remaining undistributed earnings of its international subsidiaries indefinitely. No additional deferred income taxes have been provided for any remaining undistributed foreign earnings, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested. However, should the Company change its business plans in the future and decide to repatriate a portion of these earnings to one of its U.S. subsidiaries, the Company will recognize additional income tax liabilities. As of January 3, 2021, the Company has approximately $1.5 billion of foreign earnings that it has the intent and ability to keep invested outside the U.S. indefinitely and for which no additional incremental U.S. tax cost has been provided. It is not practicable to calculate the unrecognized deferred tax liability related to such incremental tax costs on those earnings.

Note 8: 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:

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Number of common shares—basic			111,514						110,827						110,561
Effect of dilutive securities:
Stock options			466						541						761
Restricted stock awards			105						133						212
Number of common shares—diluted			112,085						111,501						111,534
Number of potentially dilutive securities excluded from calculation due to antidilutive impact			220						364						349

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 9: Accounts Receivable, Net

Accounts receivable, net as of January 3, 2021 and December 29, 2019 consisted of the following:

			January 3, 2021						December 29, 2019
			(In thousands)
Accounts receivable, net, current			$	1,155,109					$	725,184
Long-term accounts receivable, net, included in Other assets			22,510						19,677
Total accounts receivable, net			$	1,177,619					$	744,861

Accounts receivable were net of reserves for doubtful accounts of $47.6 million and $35.2 million as of January 3, 2021 and December 29, 2019, respectively.

Note 10: Inventories

Inventories as of January 3, 2021 and December 29, 2019 consisted of the following:

			January 3, 2021						December 29, 2019
			(In thousands)
Raw materials			$	205,022					$	130,673
Work in progress			35,160						26,409
Finished goods			274,385						199,855
Total inventories			$	514,567					$	356,937

Note 11: Property, Plant and Equipment, Net

Property, plant and equipment as of January 3, 2021 and December 29, 2019, consisted of the following:

			January 3, 2021						December 29, 2019
			(In thousands)
At cost:
Land			$	3,937					$	5,272
Building and leasehold improvements			291,526						250,639
Machinery and equipment			522,734						445,669
Total property, plant and equipment			818,197						701,580
Accumulated depreciation			(449,893)						(383,357)
Total property, plant and equipment, net			$	368,304					$	318,223

Depreciation expense on property, plant and equipment for the fiscal years ended January 3, 2021, December 29, 2019 and December 30, 2018 was $54.0 million, $49.7 million and $44.7 million, respectively.

Note 12: Marketable Securities and Investments

Investments as of January 3, 2021 and December 29, 2019 consisted of the following:

			January 3, 2021						December 29, 2019
			(In thousands)
Marketable securities			$	2,154					$	2,906
Equity investments			48,626						29,228
			$	50,780					$	32,134

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 2020 and 2019. 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 January 3, 2021 and December 29, 2019 consisted of the following:

			Market Value						Gross Unrealized Holding
			Cost						Gains						(Losses)
						(In thousands)
January 3, 2021
Equity securities			$	203					$	584					$	—					$	(381)
Fixed-income securities			7						7						—						—
Other			1,944						2,007						—						(63)
			$	2,154					$	2,598					$	—					$	(444)
December 29, 2019
Equity securities			$	752					$	1,109					$	—					$	(357)
Fixed-income securities			7						7						—						—
Other			2,147						2,210						—						(63)
			$	2,906					$	3,326					$	—					$	(420)

Equity investments. The Company has equity interests in privately-held entities over which the Company neither has significant influence nor control.

Equity investments without readily determinable fair values as of January 3, 2021 and December 29, 2019 consisted of the following:

			January 3, 2021						December 29, 2019
			(In thousands)
Equity investments, carried at cost minus impairment, if any			$	27,438					$	29,228
Equity investments, carried at fair value			21,188						—
			$	48,626					$	29,228

The amount of upward adjustments during fiscal years 2020 and 2019 were $35,000 and $8.2 million, respectively. The cumulative amount of upward adjustments as of each of January 3, 2021 and December 29, 2019 was $8.2 million. The amount of impairments and downward adjustments during fiscal year 2019 was $4.9 million. The cumulative amount of impairments and downward adjustments as of each of January 3, 2021 and December 29, 2019 was $4.9 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 13: 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, 2020, its annual impairment testing date for fiscal year 2020. The Company concluded based on the first step of the process that there was no goodwill impairment, and the fair value exceeded the carrying value by more than 20% for each reporting unit, except for the Meizheng Group reporting unit. The fair value of the Meizheng Group reporting unit approximated its carrying value given that the reporting unit was a relatively new acquisition.

At January 4, 2021, the Tulip reporting unit, which had a goodwill balance of $77.8 million at January 3, 2021, had a fair value that was between 10% and 20% more than its carrying value. Tulip is at increased risk of an impairment charge given its ongoing weakness due to the impact of COVID-19. Despite the increased risk associated with this reporting unit, the Company does not believe there will be a significant change in the key estimates or assumptions driving the fair value of this reporting unit that would lead to a material impairment charge. While the Company believes that its estimates of current value are reasonable, if actual results differ from the estimates and judgments used, including such items as future cash flows and the volatility inherent in markets which the Company serves, impairment charges against the carrying value of those assets could be required in the future.

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.

The changes in the carrying amount of goodwill for fiscal years 2020 and 2019 are as follows:

						Discovery & Analytical Solutions						Diagnostics						Consolidated
			(In thousands)
Balance at December 30, 2018						$	1,334,992					$	1,617,616					$	2,952,608
Foreign currency translation						(8,559)						(9,725)						(18,284)
Acquisitions, earnouts and other						172,387						4,516						176,903
Balance at December 29, 2019						1,498,820						1,612,407						3,111,227
Foreign currency translation						58,086						62,596						120,682
Acquisitions, earnouts and other						198,981						16,224						215,205
Balance at January 3, 2021						$	1,755,887					$	1,691,227					$	3,447,114

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Identifiable intangible asset balances at January 3, 2021 by category and segment were as follows:

			Discovery & Analytical Solutions						Diagnostics						Consolidated
			(In thousands)
Patents			$	28,146					$	2,709					$	30,855
Less: Accumulated amortization			(27,933)						(507)						(28,440)
Net patents			213						2,202						2,415
Trade names and trademarks			51,143						47,518						98,661
Less: Accumulated amortization			(31,859)						(16,947)						(48,806)
Net trade names and trademarks			19,284						30,571						49,855
Licenses			50,468						8,232						58,700
Less: Accumulated amortization			(49,317)						(3,135)						(52,452)
Net licenses			1,151						5,097						6,248
Core technology			456,607						333,192						789,799
Less: Accumulated amortization			(232,648)						(166,344)						(398,992)
Net core technology			223,959						166,848						390,807
Customer relationships			475,748						881,912						1,357,660
Less: Accumulated amortization			(239,428)						(283,392)						(522,820)
Net customer relationships			236,320						598,520						834,840
IPR&D			10,944						—						10,944
Net amortizable intangible assets			491,871						803,238						1,295,109
Non-amortizing intangible asset:
Trade name			70,584						—						70,584
Total			$	562,455					$	803,238					$	1,365,693

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Identifiable intangible asset balances at December 29, 2019 by category and segment were as follows:

			Discovery & Analytical Solutions						Diagnostics						Consolidated
			(In thousands)
Patents			$	28,122					$	2,709					$	30,831
Less: Accumulated amortization			(27,142)						(281)						(27,423)
Net patents			980						2,428						3,408
Trade names and trademarks			39,859						48,138						87,997
Less: Accumulated amortization			(23,632)						(16,663)						(40,295)
Net trade names and trademarks			16,227						31,475						47,702
Licenses			50,393						8,103						58,496
Less: Accumulated amortization			(47,607)						(2,126)						(49,733)
Net licenses			2,786						5,977						8,763
Core technology			390,116						298,973						689,089
Less: Accumulated amortization			(205,263)						(115,663)						(320,926)
Net core technology			184,853						183,310						368,163
Customer relationships			313,898						847,628						1,161,526
Less: Accumulated amortization			(156,967)						(221,221)						(378,188)
Net customer relationships			156,931						626,407						783,338
IPR&D			—						1,328						1,328
Net amortizable intangible assets			361,777						850,925						1,212,702
Non-amortizing intangible asset:
Trade name			70,584						—						70,584
Total			$	432,361					$	850,925					$	1,283,286

Total amortization expense related to definite-lived intangible assets was $192.6 million in fiscal year 2020, $164.3 million in fiscal year 2019 and $135.9 million in fiscal year 2018. Estimated amortization expense related to definite-lived intangible assets for each of the next five years is $211.0 million in fiscal year 2021, $191.4 million in fiscal year 2022, $164.0 million in fiscal year 2023, $139.9 million in fiscal year 2024, and $111.9 million in fiscal year 2025.

Note 14: Debt

Senior Unsecured Revolving Credit Facility. The Company's senior unsecured revolving credit facility provides for $1.0 billion of revolving loans that may be either US Dollar Base Rate loans or Eurocurrency Rate loans, as those terms are defined in the credit agreement, and has an initial maturity of September 17, 2024. As of January 3, 2021, undrawn letters of credit in the aggregate amount of $11.0 million were treated as issued and outstanding when calculating the borrowing availability under the facility. As of January 3, 2021, the Company had $830.4 million available for additional borrowing under the facility. The Company plans to use the senior unsecured revolving credit facility for general corporate purposes, which may include working capital, refinancing existing indebtedness, capital expenditures, share repurchases, acquisitions and strategic alliances. The interest rates on the Eurocurrency Rate loans are based on the Eurocurrency Rate at the time of borrowing, plus a percentage spread based on the credit rating of the Company's debt. The interest rates on the US Dollar Base Rate loans are based on the US Dollar Base Rate at the time of borrowing, plus a percentage spread based on the credit rating of the Company's debt. The base rate is the higher of (i) the Federal Funds Rate (as defined in the credit agreement) plus 50 basis points (ii) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "prime rate," or (iii) the Eurocurrency Rate plus 1.00%. The Eurocurrency margin as of January 3, 2021 was 101.5 basis points. The weighted average Eurocurrency interest rate as of January 3, 2021 was 0.02%, resulting in a weighted average effective Eurocurrency Rate, including the margin, of 1.04%, which was the interest applicable to the borrowings outstanding as of January 3, 2021. As of January 3, 2021, the senior unsecured revolving credit facility had outstanding borrowings of $158.6 million, and $2.6 million of unamortized debt issuance costs. As of December 29, 2019, the senior unsecured revolving credit facility had $325.4 million of outstanding borrowings, and $3.4 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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 January 3, 2021, the 2026 Notes had an aggregate carrying value of $604.7 million, net of $3.3 million of unamortized original issue discount and $2.8 million of unamortized debt issuance costs. As of December 29, 2019, the 2026 Notes had an aggregate carrying value of $552.2 million, net of $3.5 million of unamortized original issue discount and $3.3 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 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 “2021 Notes”) in a registered public offering and received approximately €298.7 million of net proceeds from the issuance. The 2021 Notes were issued at 99.95% of the principal amount, which resulted in a discount of €0.2 million. As of January 3, 2021, the 2021 Notes had an aggregate carrying value of $366.2 million, net of $16,200 of unamortized original issue discount and $0.2 million of unamortized debt issuance costs. As of December 29, 2019, the 2021 Notes had an aggregate carrying value of $334.2 million, net of $0.1 million of unamortized original issue discount and $1.1 million of unamortized debt issuance costs. The 2021 Notes mature in April 2021 and bear interest at an annual rate of 0.6%. Interest on the 2021 Notes is payable annually on April 9th each year. Prior to the maturity date of the 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 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 2021 Notes being redeemed, discounted on an annual basis, at the applicable Comparable Government Bond Rate (as defined in the indenture governing the 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 2021 Notes) and a contemporaneous downgrade of the 2021 Notes below investment grade, the Company will, in certain circumstances, make an offer to purchase the 2021 Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest.

3.3% Senior Unsecured Notes due in 2029. On September 12, 2019, the Company issued $850.0 million aggregate principal amount of senior unsecured notes due in 2029 (the "2029 Notes”) in a registered public offering and received $847.2 million of net proceeds from the issuance. The 2029 Notes were issued at 99.67% of the principal amount, which resulted in a discount of $2.8 million. As of January 3, 2021, the 2029 Notes had an aggregate carrying value of $840.6 million, net of $2.5 million of unamortized original issue discount and $6.9 million of unamortized debt issuance costs. As of December 29, 2019, the 2029 Notes had an aggregate carrying value of $839.9 million, net of $2.7 million of unamortized original issue discount and $7.4 million of unamortized debt issuance costs. The 2029 Notes mature in September 2029 and bear interest at an annual rate of 3.3%. Interest on the 2029 Notes is payable semi-annually on March 15th and September 15th each year. Proceeds from the 2029 Notes were used to repay all outstanding borrowings under the Company’s previous senior unsecured revolving credit facility with the remaining proceeds used in the redemption of the 5% senior unsecured notes that were due in November 2021. Prior to June 15, 2029 (three months prior to their maturity date), the Company may redeem the 2029 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 2029 Notes to be redeemed, and (ii) the sum of the present values of the remaining scheduled payments of principal and interest in respect to the 2029 Notes being redeemed (not including any portion of such payments of interest accrued but unpaid as of the date of redemption) assuming that such 2029 Notes matured on June 15, 2029, discounted at the date of redemption on a semi-annual basis (assuming a 360-day year of twelve 30-day months), at the Treasury Rate (as defined in the indenture governing the 2029 Notes) plus 25 basis points, plus accrued and unpaid interest. At any time on or after June 15, 2029 (three months prior to their

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

maturity date), the Company may redeem the 2029 Notes, at its option, at a redemption price equal to 100% of the principal amount of the 2029 Notes to be redeemed plus accrued and unpaid interest. Upon a change of control (as defined in the indenture governing the 2029 Notes) and a contemporaneous downgrade of the 2029 Notes below investment grade, each holder of 2029 Notes will have the right to require the Company to repurchase such holder's 2029 Notes for 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 $17.0 million (or €13.9 million) and $23.8 million (or €21.3 million) as of January 3, 2021 and December 29, 2019, respectively. These bank loans are primarily utilized for financing fixed assets and are required to be repaid in monthly or quarterly installments with maturity dates extending to 2028. Of these bank loans, loans in the aggregate amount of $17.0 million bear fixed interest rates between 1.1% and 4.3% and a loan in the amount of $0.1 million bears a variable interest rate based on the Euribor rate plus a margin of 1.5%. An aggregate amount of $4.8 million of the bank loans are secured by mortgages on real property and the remaining $12.2 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 secured bank loans in the aggregate amount of $6.1 million and $1.9 million as of January 3, 2021 and December 29, 2019, respectively. The secured bank loans of $6.1 million bear fixed annual interest rates between 1.95% and 8.94% and are required to be repaid in monthly installments until 2027.

The following table summarizes the maturities of the Company’s indebtedness as of January 3, 2021:

			Sr. Unsecured Revolving Credit Facility Maturing in 2024						2021 Notes						2026 Notes						2029 Notes						Other Debt Facilities												Total
			(In thousands)
2021			$	—					$	366,450					$	—					$	—					$	14,743											$	381,193
2022			—						—						—						—						4,075												4,075
2023			—						—						—						—						2,457												2,457
2024			158,595						—						—						—						1,372												159,967
2025			—						—						—						—						230												230
2026 and thereafter			—						—						610,750						850,000						282												1,461,032
Total before unamortized discount and debt issuance costs			158,595						366,450						610,750						850,000						23,159												2,008,954
Unamortized discount and debt issuance costs			(2,621)						(245)						(6,035)						(9,404)						—												(18,305)
Total			$	155,974					$	366,205					$	604,715					$	840,596					$	23,159											$	1,990,649

Note 15: Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities as of January 3, 2021 and December 29, 2019 consisted of the following:

			January 3, 2021						December 29, 2019
			(In thousands)
Payroll and incentives			$	96,502					$	77,892
Employee benefits			47,489						42,405
Deferred revenue			203,927						164,261
Federal, non-U.S. and state income taxes			97,406						29,876
Operating lease liabilities			40,330						36,573
Contract liabilities			189,718						—
Other accrued operating expenses			261,655						152,325
Total accrued expenses and other current liabilities			$	937,027					$	503,332

Note 16: Employee Benefit Plans

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 $14.1 million in fiscal year 2020, $13.6 million in fiscal year 2019, and $13.2 million in fiscal year 2018.

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.

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

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Service and administrative costs			$	7,414					$	6,598					$	6,853
Interest cost			12,876						16,546						16,146
Expected return on plan assets			(21,786)						(24,561)						(28,939)
Actuarial loss			20,291						27,134						17,146
Curtailment gain			—						(1,547)						—
Amortization of prior service (credit) cost			—						(152)						375
Net periodic pension cost			$	18,795					$	24,018					$	11,581

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, Nature of Operations and Accounting Policies. 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. Actuarial gains and losses, including other components of periodic pension cost, are recognized in the line item "Interest and other expense, net" in the consolidated statements of operations.

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 January 3, 2021 and December 29, 2019.

			January 3, 2021												December 29, 2019
Non-U.S.						U.S.						Non-U.S.						U.S.
(In thousands)
Actuarial present value of benefit obligations:
Accumulated benefit obligations			$	392,948					$	317,679					$	338,722					$	304,710
Change in benefit obligations:
Projected benefit obligations at beginning of year			$	341,455					$	304,710					$	311,168					$	283,310
Service and administrative costs			5,314						2,100						4,248						2,350
Interest cost			3,991						8,885						5,448						11,098
Benefits paid and plan expenses			(15,823)						(20,510)						(12,778)						(21,162)
Participants’ contributions			37						—						162						—
Business acquisitions			(120)						—						—						—
Plan curtailments			—						—						(1,420)						—
Actuarial loss			35,910						22,494						34,602						29,114
Effect of exchange rate changes			24,575						—						25						—
Projected benefit obligations at end of year			$	395,339					$	317,679					$	341,455					$	304,710
Change in plan assets:
Fair value of plan assets at beginning of year			$	179,860					$	254,450					$	159,163					$	234,342
Actual return on plan assets			25,153						34,746						19,873						41,270
Benefits paid and plan expenses			(15,823)						(20,510)						(12,778)						(21,162)
Employer’s contributions			7,506						—						8,200						—
Participants’ contributions			37						—						162						—
Effect of exchange rate changes			8,011						—						5,240						—
Fair value of plan assets at end of year			$	204,744					$	268,686					$	179,860					$	254,450
Net liabilities recognized in the consolidated balance sheets			$	(190,595)					$	(48,993)					$	(161,595)					$	(50,260)
Net amounts recognized in the consolidated balance sheets consist of:
Other assets			$	36,295					$	—					$	36,699					$	—
Current liabilities			(7,597)						—						(6,764)						—
Long-term liabilities			(219,293)						(48,993)						(191,530)						(50,260)
Net liabilities recognized in the consolidated balance sheets			$	(190,595)					$	(48,993)					$	(161,595)					$	(50,260)
Net amounts recognized in accumulated other comprehensive income consist of:
Prior service cost			$	—					$	—					$	—					$	—
Actuarial assumptions as of the year-end measurement date:
Discount rate			0.92		%				2.21		%				1.34		%				3.01		%
Rate of compensation increase			2.78		%				None						3.36		%				None

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

			January 3, 2021												December 29, 2019												December 30, 2018
			Non-U.S.						U.S.						Non-U.S.						U.S.						Non-U.S.						U.S.
Discount rate			1.34		%				3.01		%				2.07		%				4.05		%				1.99		%				3.56		%
Rate of compensation increase			3.36		%				None						3.48		%				None						3.50		%				None
Expected rate of return on assets			2.20		%				7.25		%				5.30		%				7.25		%				5.90		%				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:

			January 3, 2021						December 29, 2019
			(In thousands)
Pension Plans with Projected Benefit Obligations in Excess of Plan Assets
Projected benefit obligations			$	226,890					$	198,294
Fair value of plan assets			—						—
Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets
Accumulated benefit obligations			$	224,499					$	195,657
Fair value of plan assets			—						—

Assets of the defined benefit pension plans are primarily equity and debt securities. Asset allocations as of January 3, 2021 and December 29, 2019, and target asset allocations for fiscal year 2021 are as follows:

			Target Allocation												Percentage of Plan Assets at
			January 2, 2022												January 3, 2021												December 29, 2019
Asset Category			Non-U.S.						U.S.						Non-U.S.						U.S.						Non-U.S.						U.S.
Equity securities			0-5%						40-60%						—		%				45		%				—		%				41		%
Debt securities			85-90%						40-60%						88		%				55		%				87		%				59		%
Other			10-15%						0-10%						12		%				—		%				13		%				—		%
Total			100		%				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 2018, the Society of Actuaries issued an updated projection scale, MP-2018, which incorporated an additional year (2016) of U.S. population data and reduced the life expectancy used to determine the projected benefit obligation. 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. During fiscal year 2019, the Society of Actuaries issued an updated projection scale, MP-2019, which incorporated an additional year (2017) of U.S. population data and reduced the life expectancy used to determine the projected benefit obligation. The Company adopted MP-2019 as of December 29, 2019. The adoption of MP-2019 resulted in a $4.4 million decrease to the projected benefit obligation at December 29, 2019. During fiscal

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

year 2020, the Society of Actuaries issued an updated projection scale, MP-2020, which incorporated an additional year (2018) of U.S. population data and made a few adjustments to the long-term rate of mortality improvement assumed. The Company adopted MP-2020 as of January 3, 2021. The adoption of MP-2020 resulted in a $2.7 million decrease to the projected benefit obligation at January 3, 2021. The changes to the projected benefit obligations due to the adoption of the mortality base table and projection scale are included within "Actuarial loss (gain)" in the Change in Benefit Obligations for fiscal years 2020 and 2019 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 January 3, 2021 and December 29, 2019 by asset category, classified in the three levels of inputs described in Note 22 to the consolidated financial statements are as follows:

									Fair Value Measurements at January 3, 2021 Using:
Total Carrying Value at January 3, 2021						Quoted Prices in Active Markets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
(In thousands)
Cash			$	6,363					$	6,363					$	—					$	—
Equity securities:
U.S. large-cap			78,234						78,234						—						—
International large-cap value			28,315						28,315						—						—
Emerging markets growth			13,594						13,594						—						—
Foreign real estate funds			23,259						—						—						23,259
Fixed income securities:
Non-U.S. treasury securities			106,315						—						106,315						—
Corporate and U.S. debt instruments			140,349						43,500						96,849						—
Corporate bonds			35,816						—						35,816						—
High yield bond funds			2,954						2,954						—						—
Other types of investments:
Non-U.S. government index linked bonds			38,231						—						38,231						—
Total assets measured at fair value			$	473,430					$	172,960					$	277,211					$	23,259

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

									Fair Value Measurements at December 29, 2019 Using:
Total Carrying Value at December 29, 2019						Quoted Prices in Active Markets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
(In thousands)
Cash			$	6,177					$	6,177					$	—					$	—
Equity Securities:
U.S. large-cap			57,797						57,797						—						—
International large-cap value			26,914						26,914						—						—
U.S. small mid-cap			2,700						2,700						—						—
Emerging markets growth			12,853						12,853						—						—
Domestic real estate funds			2,010						2,010						—						—
Foreign real estate funds			22,688						—						—						22,688
Fixed income securities:
Non-U.S. Treasury Securities			93,473						—						93,473						—
Corporate and U.S. debt instruments			139,300						47,104						92,196						—
Corporate bonds			29,846						—						29,846						—
High yield bond funds			5,734						5,734						—						—
Other types of investments:
Multi-strategy hedge funds			1,721						—						—						1,721
Non-U.S. government index linked bonds			33,097						—						33,097						—
Total assets measured at fair value			$	434,310					$	161,289					$	248,612					$	24,409

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 January 3, 2021 compared to December 29, 2019. 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 2020, 2019 and 2018 is as follows:

												Fair Value Measurements Using Significant Unobservable Inputs (Level 3):
												Foreign Real Estate Funds						Multi-strategy Hedge Funds						Total
									(In thousands)
Balance at December 31, 2017															$	—					$	16,789					$	16,789
Unrealized gains															—						145						145
Purchases															22,196						—						22,196
Balance at December 30, 2018															22,196						16,934						39,130
Sales															—						(15,586)						(15,586)
Realized gains															—						4,175						4,175
Unrealized gains (losses)															492						(3,802)						(3,310)
Balance at December 29, 2019															22,688						1,721						24,409
Sales															—						(1,721)						(1,721)
Unrealized gains															571						—						571
Balance at January 3, 2021															$	23,259					$	—					$	23,259

With respect to plans outside of the United States, the Company expects to contribute $7.6 million in the aggregate during fiscal year 2021. During fiscal years 2020, 2019 and 2018, the Company contributed $7.5 million, $8.2 million and $8.5 million in the aggregate, respectively, to pension plans outside of the United States. During fiscal year 2021, the Company contributed $20.0 million to its defined benefit pension plan in the United States for the plan year 2019.

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)
2021			$	12,932					$	19,373
2022			12,960						19,435
2023			13,349						19,504
2024			14,152						19,495
2025			14,206						19,390
2026-2030			72,747						92,258

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 January 3, 2021 and December 29, 2019, the projected benefit obligations were $25.9 million and $25.7 million, respectively. Assets with a fair value of $1.9 million and $2.1 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 January 3, 2021 and December 29, 2019, respectively. Pension expenses and income for this plan netted to expense of $2.1 million in fiscal year 2020, expense of $4.8 million in fiscal year 2019 and income of $0.3 million in fiscal year 2018.

Postretirement Medical Plans: The Company provides healthcare benefits for eligible retired U.S. employees under a comprehensive major medical plan or under health maintenance organizations where available. Eligible U.S. employees qualify for retiree health benefits if they retire directly from the Company and have at least ten years of service. Generally, the major medical plan pays stated percentages of covered expenses after a deductible is met and takes into consideration payments by other group coverage and by Medicare. The plan requires retiree contributions under most circumstances and has provisions for cost-sharing charges. Effective January 1, 2000, this plan was closed to new hires. For employees retiring after 1991, the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company has capped its medical premium contribution based on employees’ years of service. The Company funds the amount allowable under a 401(h) provision in the Company’s defined benefit pension plan. Assets of the plan are primarily equity and debt securities and are available only to pay retiree health benefits.

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

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Service cost			$	73					$	87					$	106
Interest cost			94						116						120
Expected return on plan assets			(1,389)						(1,175)						(1,254)
Actuarial (gain) loss			(1,647)						(1,776)						1,621
Net periodic postretirement medical benefit (credit) cost			$	(2,869)					$	(2,748)					$	593

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 January 3, 2021 and December 29, 2019.

			January 3, 2021						December 29, 2019
			(In thousands)
Actuarial present value of benefit obligations:
Retirees			$	611					$	583
Active employees eligible to retire			420						362
Other active employees			2,069						1,966
Accumulated benefit obligations at beginning of year			3,100						2,911
Service cost			73						87
Interest cost			94						116
Benefits paid			(101)						(122)
Actuarial (gain) loss			(179)						108
Change in accumulated benefit obligations during the year			(113)						189
Retirees			545						611
Active employees eligible to retire			1,232						420
Other active employees			1,211						2,069
Accumulated benefit obligations at end of year			$	2,988					$	3,100
Change in plan assets:
Fair value of plan assets at beginning of year			$	19,216					$	16,279
Actual return on plan assets			2,756						2,937
Fair value of plan assets at end of year			$	21,972					$	19,216
Net assets recognized in the consolidated balance sheets			$	18,984					$	16,116
Net amounts recognized in the consolidated balance sheets consist of:
Other assets			$	18,984					$	16,116
Net amounts recognized in accumulated other comprehensive income consist of:
Prior service cost			$	—					$	—
Actuarial assumptions as of the year-end measurement date:
Discount rate			2.34		%				3.09		%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

			January 3, 2021						December 29, 2019						December 30, 2018
Discount rate			3.09		%				4.09		%				3.60		%
Expected rate of return on assets			7.25		%				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 January 3, 2021 and December 29, 2019 by asset category, classified in the three levels of inputs described in Note 22, are as follows:

									Fair Value Measurements at January 3, 2021 Using:
Total Carrying Value at January 3, 2021						Quoted Prices in Active Markets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
(In thousands)
Cash			$	428					$	428					$	—					$	—
Equity securities:
U.S. large-cap			6,398						6,398						—						—
International large-cap value			2,315						2,315						—						—
Emerging markets growth			1,112						1,112						—						—
Fixed income securities:
Corporate and U.S. debt instruments			11,477						3,557						7,920						—
High yield bond funds			242						242						—						—
Total assets measured at fair value			$	21,972					$	14,052					$	7,920					$	—

									Fair Value Measurements at December 29, 2019 Using:
Total Carrying Value at December 29, 2019						Quoted Prices in Active Markets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
(In thousands)
Cash			$	408					$	408					$	—					$	—
Equity securities:
U.S. large-cap			4,365						4,365						—						—
International large-cap value			2,033						2,033						—						—
U.S. small mid-cap			204						204						—						—
Emerging markets growth			971						971						—						—
Domestic real estate funds			152						152						—						—
Fixed income securities:
Corporate debt instruments			10,520						3,557						6,963						—
High yield bond funds			433						433						—						—
Other types of investments:
Multi-strategy hedge funds			130						—						—						130
Total assets measured at fair value			$	19,216					$	12,123					$	6,963					$	130

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

A reconciliation of the beginning and ending Level 3 assets for fiscal years 2020, 2019 and 2018 is as follows:

												Fair Value Measurements Using Significant Unobservable Inputs (Level 3):
									Multi-strategy Hedge Funds
									(In thousands)
Balance at December 31, 2017												$	1,151
Unrealized gains												25
Balance at December 30, 2018												1,176
Sales												(1,074)
Realized gains												315
Unrealized losses												(287)
Balance at December 29, 2019												130
Sales												(130)
Balance at January 3, 2021												$	—

The Company does not expect to make any contributions to the postretirement medical plan during fiscal year 2021.

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

Postretirement Medical Plan
			(In thousands)
2021			$	119
2022			137
2023			150
2024			161
2025			172
2026-2030			883

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 $0.6 million and $1.1 million as of January 3, 2021 and December 29, 2019, respectively.

Note 17: Contingencies

The Company is conducting a number of environmental investigations and remedial actions at current and former locations of the Company and, along with other companies, has been named a potentially responsible party (“PRP”) for certain waste disposal sites. The Company accrues for environmental issues in the accounting period that the Company's responsibility is established and when the cost can be reasonably estimated. The Company has accrued $12.9 million and $7.7 million as of January 3, 2021 and December 29, 2019, 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 January 3, 2021 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 18: Warranty Reserves

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

A summary of warranty reserve activity for the fiscal years ended January 3, 2021, December 29, 2019 and December 30, 2018 is as follows:

			(In thousands)
Balance at December 31, 2017			$	9,050
Provision charged to income			13,545
Payments			(13,775)
Adjustments to previously provided warranties, net			(157)
Foreign currency translation and acquisitions			(270)
Balance at December 30, 2018			8,393
Provision charged to income			12,199
Payments			(14,613)
Adjustments to previously provided warranties, net			2,889
Foreign currency translation and acquisitions			(56)
Balance at December 29, 2019			8,812
Provision charged to income			15,315
Payments			(15,130)
Adjustments to previously provided warranties, net			2,721
Foreign currency translation and acquisitions			355
Balance at January 3, 2021			$	12,073

Note 19: Stock Plans

Stock-Based Compensation:

The Company’s 2019 Incentive Plan (the “2019 Plan”) authorizes the issuance of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and cash awards as part of the Company’s compensation programs. The 2019 Plan was approved by the Company’s Board on January 24, 2019 and by the Company’s shareholders on

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

April 23, 2019. The 2019 Plan replaced the Company’s 2009 Incentive Plan (the “2009 Plan”), under which the Company’s common stock was made available for stock option grants, restricted stock awards, performance restricted stock units, performance units and stock awards as part of the Company’s compensation programs. Upon shareholder approval of the 2019 Plan, 6.25 million shares of the Company’s common stock, as well as shares of the Company’s common stock previously granted under the 2009 Plan that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price subject to a contractual repurchase right, became available for grant under the 2019 Plan. Awards granted under the 2009 Plan prior to its expiration remain outstanding. As part of the Company’s compensation programs, the Company also offers shares of its common stock under its Employee Stock Purchase Plan.

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, included in the Company’s consolidated statements of operations for fiscal years 2020, 2019 and 2018:

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Cost of product and service revenue			$	1,388					$	1,620					$	1,466
Research and development expenses			1,228						1,061						1,359
Selling, general and administrative expenses			26,510						28,833						25,942
Total stock-based compensation expense			$	29,126					$	31,514					$	28,767

The total income tax benefit recognized in the consolidated statements of operations for stock-based compensation was $17.2 million in fiscal year 2020, $11.6 million in fiscal year 2019 and $13.6 million in fiscal year 2018. Stock-based compensation costs capitalized as part of inventory were $0.4 million and $0.3 million as of January 3, 2021 and December 29, 2019, respectively. Stock compensation expense from acceleration of vesting of certain stock awards to the Company's former Chief Executive Officer was $7.7 million for fiscal year 2019.

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

The fair value of each option grant is estimated using the Black-Scholes option pricing model. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility was calculated 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:

			January 3, 2021						December 29, 2019						December 30, 2018
Risk-free interest rate			0.9		%				2.5		%				3.0		%
Expected dividend yield			0.3		%				0.3		%				0.4		%
Expected lives			5 years						5 years						5 years
Expected stock volatility			23.8		%				22.8		%				20.7		%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes stock option activity for the fiscal year ended January 3, 2021:

			Number of Shares						Weighted- Average Exercise Price
			(Shares in thousands)
Outstanding at beginning of year			1,535						$	60.42
Granted			266						86.87
Exercised			(764)						49.31
Canceled			(1)						95.74
Forfeited			(75)						87.34
Outstanding at end of year			961						$	74.40
Exercisable at end of year			562						$	65.30

The aggregate intrinsic value for stock options outstanding at January 3, 2021 was $66.4 million with a weighted-average remaining contractual term of 3.9 years. The aggregate intrinsic value for stock options exercisable at January 3, 2021 was $43.9 million with a weighted-average remaining contractual term of 2.6 years. At January 3, 2021, there were 1.0 million stock options that were vested, and expected to vest in the future, with an aggregate intrinsic value of $66.4 million and a weighted-average remaining contractual term of 3.9 years.

The weighted-average per-share grant-date fair value of options granted during fiscal years 2020, 2019 and 2018 was $18.98, $22.63, and $17.56, respectively. The total intrinsic value of options exercised during fiscal years 2020, 2019 and 2018 was $51.1 million, $19.1 million, and $35.0 million, respectively. Cash received from option exercises for fiscal years 2020, 2019 and 2018 was $37.7 million, $19.7 million, and $24.8 million, respectively. The total compensation expense recognized related to the Company’s outstanding options was $3.6 million in fiscal year 2020, $6.7 million in fiscal year 2019 and $5.4 million in fiscal year 2018.

There was $4.7 million of total unrecognized compensation cost related to nonvested stock options granted as of January 3, 2021. 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.

The following table summarizes restricted stock award activity for the fiscal year ended January 3, 2021:

			Number of Shares						Weighted- Average Grant- Date Fair Value
			(Shares in thousands)
Nonvested at beginning of year			345						$	78.69
Granted			184						84.83
Vested			(193)						72.28
Forfeited			(40)						86.32
Nonvested at end of year			296						$	85.67

The fair value of restricted stock awards vested during fiscal years 2020, 2019 and 2018 was $14.0 million, $12.0 million, and $10.4 million, respectively. The total compensation expense recognized related to the restricted stock awards was $10.8 million in fiscal year 2020, $12.7 million in fiscal year 2019 and $11.7 million in fiscal year 2018.

As of January 3, 2021, there was $14.3 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Performance Restricted Stock Units: As part of the Company's executive compensation program, the Company granted 49,138 and 76,218 performance restricted stock units during fiscal years 2020 and 2019, 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 2020 and 2019 was $95.43 and $92.95, respectively. During fiscal year 2020, 29,943 performance restricted stock units were forfeited. The total compensation expense recognized related to the performance restricted stock units was $7.9 million in fiscal year 2020 and $5.9 million in fiscal year 2019. As of January 3, 2021, there were 121,759 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. No performance units were granted during the fiscal years 2020 and 2019. The Company granted 37,281 performance units during fiscal year 2018. The weighted-average per-share grant-date fair value of performance units granted during fiscal year 2018 was $73.23. During fiscal years 2020 and 2019, 1,948 performance units and 10,116 performance units, respectively, were forfeited. The total compensation expense related to performance units was $6.1 million, $5.6 million, and $7.7 million for fiscal years 2020, 2019 and 2018, respectively. As of January 3, 2021, there were 31,207 performance units outstanding subject to forfeiture, with a corresponding liability of $9.4 million recorded in accrued expenses and other current liabilities in the consolidated balance sheets.

Stock Awards: The Company’s stock award program provides an annual equity award to non-employee directors. For fiscal years 2020, 2019 and 2018, 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 2020, 2019 and 2018, the Company awarded 8,333 shares, 7,301 shares, and 11,088 shares, respectively, to non-employee directors. The weighted-average per-share grant-date fair value of stock awards granted during fiscal years 2020, 2019 and 2018 was $91.75, $95.84, and $72.17, respectively. The total compensation expense recognized related to these stock awards was $0.8 million, $0.7 million and $0.8 million in fiscal years 2020, 2019 and 2018, respectively.

Employee Stock Purchase Plan:

In April 1999, the Company’s shareholders approved the 1998 Employee Stock Purchase Plan. In April 2005, the Compensation and Benefits Committee of the Board voted to amend the Employee Stock Purchase Plan, effective July 1, 2005, whereby participating employees have the right to purchase common stock at a price equal to 95% of the closing price on the last day of each six-month offering period. The number of shares which an employee may purchase, subject to certain aggregate limits, is determined by the employee’s voluntary contribution, which may not exceed 10% of the employee’s base compensation. During fiscal year 2020, the Company issued 38,727 shares of common stock under the Company’s Employee Stock Purchase Plan at a weighted-average price of $105.23 per share. During fiscal year 2019, the Company issued 33,843 shares under this plan at a weighted-average price of $82.25 per share. During fiscal year 2018, the Company issued 21,321 shares under this plan at a weighted-average price of $69.57 per share. At January 3, 2021 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 20: Stockholders’ Equity

Comprehensive Income:

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

			Foreign Currency Translation Adjustment, net of tax						Unrecognized Prior Service Costs, net of tax						Unrealized (Losses) Gains on Securities, net of tax												Accumulated Other Comprehensive Income (Loss)
			(In thousands)
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			(6,489)						—						—												(6,489)
Balance, December 30, 2018			(176,459)						245						(267)												(176,481)
Current year change			(23,978)						807						6												(23,165)
Balance, December 29, 2019			(200,437)						1,052						(261)												(199,646)
Current year change			169,500						(1,799)						(16)												167,685
Balance, January 3, 2021			$	(30,937)					$	(747)					$	(277)											$	(31,961)

During fiscal years 2020, 2019 and 2018, pre-tax credit (cost) of $1.8 million, $0.8 million, and $(0.1) 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 23, 2018, the Board of Directors (the "Board") authorized the Company to repurchase shares of common stock for an aggregate amount up to $250.0 million under a stock repurchase program (the "Repurchase Program"). The Repurchase Program expired on July 23, 2020, and no shares remain available for repurchase under the Repurchase Program due to its expiration. On July 31, 2020, the Board 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 27, 2022 unless terminated earlier by the Board and may be suspended or discontinued at any time. During fiscal year 2020, the Company had no stock repurchases under either the Repurchase Program or the New Repurchase Program. As of January 3, 2021, $250.0 million remained available for aggregate repurchases of shares under the New Repurchase Program.

Subsequent to fiscal year 2020, the Company repurchased 233,000 shares of common stock under the New Repurchase Program at an aggregate cost of $33.6 million.

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 fiscal year 2020, the Company repurchased 72,251 shares of common stock for this purpose at an aggregate cost of $6.9 million. During fiscal year 2019, the Company repurchased 68,536 shares of common stock for this purpose at an aggregate cost of $6.3 million. During fiscal year 2018, the Company repurchased 66,506 shares of common stock for this purpose at an aggregate cost of $5.2 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 2020 and 2019. At January 3, 2021, the Company had accrued $7.9 million for a dividend declared in October 2020 for the fourth quarter of fiscal year 2020 that was paid in February 2021. On January 28, 2021, the Company announced that the Board had declared a quarterly dividend of $0.07 per share for the first quarter of fiscal year 2021 that will be payable in May 2021. 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 21: 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 Brazilian Real, British Pound, Chinese Yuan, Euro, Indian Rupee, Singapore Dollar and Swedish Krona. The Company held forward foreign exchange contracts, designated as economic hedges, with U.S. dollar equivalent notional amounts totaling $808.0 million at January 3, 2021, $277.6 million at December 29, 2019, and $223.3 million at December 30, 2018, 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 2020, 2019 and 2018.

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 €33.4 million and U.S. Dollar notional amounts of $499.0 million as of January 3, 2021, combined Euro notional amounts of €105.8 million and combined U.S. Dollar notional amounts of $5.6 million as of December 29, 2019, and combined Euro notional amounts of €37.3 million and combined U.S. Dollar notional amounts of $5.7 million as of December 30, 2018. 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 2020 and 2019. The Company paid $4.6 million and $1.3 million during the fiscal years 2020 and 2019, respectively, from the settlement of these hedges.

During fiscal year 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 January 3, 2021, the total notional amount of the 2026 Notes that was designated to hedge investments in foreign subsidiaries was €497.2 million. The unrealized foreign exchange losses (gains) recorded in AOCI related to the net investment hedge were $49.6 million and $(4.9) million during the fiscal years 2020 and 2019, respectively.

During fiscal year 2018, the Company designated the 2021 Notes to hedge its investments in certain foreign subsidiaries. Unrealized translation adjustments from the 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. During the second quarter of fiscal year 2020, the Company removed the hedging relationship of the first €100.0 million of the 2021 Notes and investments in certain foreign subsidiaries. During the third quarter of fiscal year 2020, the Company removed the hedging relationship of the remaining €200.0 million of the 2021 Notes and investments in certain foreign subsidiaries. The unrealized foreign exchange losses

(gains) recorded in AOCI related to the net investment hedge were $1.8 million and $(8.0) million during the fiscal years 2020 and 2019, respectively.

During fiscal year 2019, the Company entered into a cross-currency swap designated as a net investment hedge to hedge the Euro currency exposure of the Company’s net investment in certain foreign subsidiaries. This agreement is a contract to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. Changes in the fair value of this swap are recorded in equity as a component of AOCI in the same manner as foreign currency translation adjustments. In assessing the effectiveness of this hedge, the Company uses a method based on changes in spot rates to measure the impact of the foreign currency exchange rate fluctuations on both its foreign subsidiary net investment and the related swap. Under this method, changes in the fair value of the hedging instrument other than those due to changes in the spot rate are initially recorded in AOCI as a translation adjustment, and then are amortized into other (income) expense, net in the condensed consolidated statement of operations using a systematic and rational method over the instrument’s term. Changes in the fair value associated with the effective portion (i.e. those changes due to the spot rate) are recorded in AOCI as a translation adjustment and are released and recognized in earnings only upon the sale or liquidation of the hedged net investment. The cross-currency swap has an initial notional value of €197.4 million or $220.0 million and matures on November 15, 2021. Interest on the cross-currency swap is payable semi-annually, in Euro, on May 15th and November 15th of each year based on the Euro notional value and a fixed rate of 2.47%. The Company receives interest in U.S. dollars on May 15th and November 15th of each year based on the U.S. dollar equivalent of the Euro notional value and a fixed rate of 5.00%. As of January 3, 2021, the fair value of the cross-currency swap was $(18.3) million, which was recorded in AOCI. The unrealized foreign exchange (losses) gains recorded in AOCI related to cross-currency swap were $(18.6) million and $0.3 million during the fiscal years 2020 and 2019, respectively.

During the second and third quarters of fiscal year 2020, the Company entered into forward foreign exchange contracts, designated as cash flow hedges, to hedge the 2021 Notes. The effective portion of the gain or loss of the cash flow hedges will be reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings. As of January 3, 2021, the total notional amount of the forward foreign exchange contracts that were designated as cash flow hedges was €300.0 million. The unrealized foreign exchange gains recorded in earnings related to the cash flow hedges were $29.3 million during the fiscal year 2020.

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 22: 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 January 3, 2021.

The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during fiscal years 2020 and 2019. 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 January 3, 2021 and December 29, 2019 classified in one of the three classifications described above:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

									Fair Value Measurements at January 3, 2021 Using:
			Total Carrying Value at January 3, 2021						Quoted Prices in Active Markets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
			(In thousands)
Marketable securities			$	2,154					$	2,154					$	—					$	—
Foreign exchange derivative assets			31,248						—						31,248						—
Foreign exchange derivative liabilities			(21,413)						—						(21,413)						—
Contingent consideration			(2,953)						—						—						(2,953)

									Fair Value Measurements at December 29, 2019 Using:
			Total Carrying Value at December 29, 2019						Quoted Prices in Active Markets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
			(In thousands)
Marketable securities			$	2,906					$	2,906					$	—					$	—
Foreign exchange derivative assets			451						—						451						—
Foreign exchange derivative liabilities			(1,538)						—						(1,538)						—
Contingent consideration			(35,481)						—						—						(35,481)

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 January 3, 2021 and December 29, 2019, 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 Diagnostics AB ("Vanadis"). Under the terms of the acquisition, the initial purchase consideration was $32.0 million, net of cash and the Company was 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 fair value of the contingent consideration as of the acquisition date was estimated at $56.9 million. As of January 3, 2021, the Company has no remaining obligation to the previous owners of Vanadis.

During the fiscal year 2019, the Company recorded a contingent consideration obligation relating to other acquisitions with an estimated fair value of $12.7 million. During the fiscal year 2020, the Company paid $23.7 million of contingent consideration, of which $10.4 million was included in financing activities and $13.3 million was included in operating activities in the consolidated statements of cash flows. During the fiscal year 2019, the Company paid $50.9 million of contingent consideration, of which $29.9 million was included in financing activities and $20.9 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 January 3, 2021, the Company may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $7.3 million. The expected maximum earnout period for acquisitions with open contingency period does not exceed 2.9 years from January 3, 2021, and the remaining weighted average expected earnout period at January 3, 2021 was 1.9 years.

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

			(In thousands)
Balance at December 31, 2017			$	(65,328)
Amounts paid and foreign currency translation			16,506
Change in fair value (included within selling, general and administrative expenses)			(14,639)
Balance at December 30, 2018			(69,661)
Additions			(12,734)
Amounts paid and foreign currency translation			50,795
Change in fair value (included within selling, general and administrative expenses)			(3,881)
Balance at December 29, 2019			(35,481)
Amounts paid and foreign currency translation			23,701
Change in fair value (included within selling, general and administrative expenses)			8,827
Balance at January 3, 2021			$	(2,953)

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 January 3, 2021, the Company’s senior unsecured revolving credit facility, which provides for $1.0 billion of revolving loans, had a carrying value of $156.0 million, net of $2.6 million of unamortized debt issuance costs. As of December 29, 2019, the Company's senior unsecured revolving credit facility had a carrying value of $322.0 million, net of $3.4 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 2020. Consequently, the carrying value approximates fair value and were classified as Level 2.

The Company's 2026 Notes, with a face value of €500.0 million, had an aggregate carrying value of $604.7 million, net of $3.3 million of unamortized original issue discount and $2.8 million of unamortized debt issuance costs as of January 3, 2021. The 2026 Notes had an aggregate carrying value of $552.2 million, net of $3.5 million of unamortized original issue discount and $3.3 million of unamortized debt issuance costs as of December 29, 2019. The 2026 Notes had a fair value of €539.8 million (or $659.3 million) and €518.5 million (or $579.6 million) as of January 3, 2021 and December 29, 2019, 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 2021 Notes, with a face value of €300.0 million, had an aggregate carrying value of $366.2 million, net of $16,200 of unamortized original issue discount and $0.2 million of unamortized debt issuance costs as of January 3, 2021. The 2021 Notes had an aggregate carrying value of $334.2 million, net of $0.1 million of unamortized original issue discount and $1.1 million of unamortized debt issuance costs as of December 29, 2019. The 2021 Notes had a fair value of €300.5 million (or $367.1 million) and €301.9 million (or $337.4 million) as of January 3, 2021 and December 29, 2019. The fair value of the 2021 Notes is estimated using market quotes from brokers and is based on current rates offered for similar debt.

The Company's 2029 Notes, with a face value of $850.0 million, had an aggregate carrying value of $840.6 million, net of $2.5 million of unamortized original issue discount and $6.9 million of unamortized debt issuance costs as of January 3, 2021. The 2029 Notes had an aggregate carrying value of $839.9 million, net of $2.7 million of unamortized original issue discount and $7.4 million of unamortized debt issuance costs as of December 29, 2019. The 2029 Notes had a fair value of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

$957.9 million and $872.3 million as of January 3, 2021 and December 29, 2019. The fair value of the 2029 Notes is estimated using market quotes from brokers and is based on current rates offered for similar debt.

The Company’s other debt facilities had an aggregate carrying value of $23.2 million and $25.7 million as of January 3, 2021 and December 29, 2019, respectively. As of January 3, 2021, these consisted of bank loans in the aggregate amount of $23.1 million bearing fixed interest rates between 1.1% and 8.9% and a bank loan in the amount of $0.1 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 2020. Consequently, the carrying value approximates fair value.

As of January 3, 2021, the 2021 Notes, 2026 Notes, 2029 Notes and other debt facilities were classified as Level 2.

As of January 3, 2021, 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 23: Leases

Lessee Disclosures

The Company leases certain property and equipment under operating and finance leases. The Company's leases have remaining lease terms of less than 1 year to 30 years, some of which include options to extend the lease for up to 5 years, and some of which include options to terminate the lease within 1 year. Finance leases are not material to the Company.

The components of lease expense were as follows:

			January 3, 2021						December 29, 2019
			(In thousands)
Lease Cost:
Operating lease cost			$	56,977					$	61,205

Supplemental cash flow information related to leases was as follows:

			January 3, 2021						December 29, 2019
			(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	47,427					$	50,155

Supplemental balance sheet information related to leases was as follows:

			January 3, 2021						December 29, 2019
			(In thousands, except lease term and discount rate)
Operating Leases:
Operating lease right-of-use assets			$	207,236					$	167,276
Operating lease liabilities included in Accrued expenses and other current liabilities			$	40,330					$	36,573
Operating lease liabilities			188,402						146,399
Total operating liabilities			$	228,732					$	182,972
Weighted Average Remaining Lease Term in Years
Operating leases			8.1
Weighted Average Remaining Discount Rate
Operating leases			2.9%

Maturities of operating lease liabilities as of January 3, 2021 were as follows:

			(In thousands)
2021			$	48,986
2022			40,097
2023			30,044
2024			26,667
2025			24,847
2026 and thereafter			90,518
Total lease payments			261,159
Less imputed interest			(32,427)
Total			$	228,732

Lessor Disclosures

Certain of the Company's contracts require that it place its instrument at the customer's site and sell reagents to the customer. As the predominant component in these contracts are the sales of reagents, the Company accounts for the combined component under ASC 606 only when both of the following criteria are met: 1) the timing and pattern of transfer of the non-lease component or components and associated lease component are the same; and 2) the lease component, if accounted for separately, would be classified as an operating lease. When only one of the criteria is met, the Company accounts for the non-lease component under ASC 606 and the lease component under ASC 842. Profit or loss, interest income and aggregate net investment in sales-type leases that did not qualify for the practical expedient are not material to the Company.

Note 24: 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 expenses to the reportable segments when these costs are administered or paid by the corporate headquarters based on the extent to which the segment benefited from the expenses. These amounts have been calculated in a consistent manner and are included in the Company’s calculations of segment results to internally plan and assess the performance of each segment for all purposes, including determining the compensation of the business leaders for each of the Company’s operating segments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Discovery & Analytical Solutions
Product revenue			$	995,216					$	1,054,862					$	1,010,899
Service revenue			720,587						691,299						682,312
Total revenue			1,715,803						1,746,161						1,693,211
Operating income from continuing operations(1)			183,471						238,331						230,481
Diagnostics
Product revenue			1,783,509						962,180						924,594
Service revenue			283,433						175,332						160,191
Total revenue			2,066,942						1,137,512						1,084,785
Operating income from continuing operations(1)(2)			874,206						189,330						153,196
Corporate
Operating loss from continuing operations(3)			(79,096)						(65,688)						(59,793)
Continuing Operations
Product revenue			2,778,725						2,017,042						1,935,493
Service revenue			1,004,020						866,631						842,503
Total revenue			3,782,745						2,883,673						2,777,996
Operating income from continuing operations			978,581						361,973						323,884
Interest and other expense, net (see Note 6)			72,217						124,831						66,201
Income from continuing operations before income taxes			$	906,364					$	237,142					$	257,683

---

(1)Legal costs for significant litigation matters and settlements in the Company's Discovery & Analytical Solutions segment were $5.9 million, $2.2 million and $5.3 million for fiscal years 2020, 2019 and 2018, respectively. Legal costs for significant litigation matters and settlements in the Company's Diagnostics segment were $1.2 million, $0.1 million and $0.2 million for fiscal years 2020, 2019 and 2018, respectively.

(2)Asset impairment in the Company's Diagnostics segment was $7.9 million for fiscal year 2020.

(3)Costs for significant environmental matters was $5.2 million for fiscal year 2020. Stock compensation expense from acceleration of executive compensation was $7.7 million for fiscal year 2019.

Additional information relating to the Company’s reporting segments is as follows for the three fiscal years ended January 3, 2021:

			Depreciation and Amortization Expense																		Capital Expenditures
			January 3, 2021						December 29, 2019						December 30, 2018						January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)																		(In thousands)
Discovery & Analytical Solutions			$	93,516					$	74,445					$	70,362					$	20,217					$	27,778					$	34,852
Diagnostics			149,738						136,476						107,434						55,236						46,863						54,737
Corporate			3,253						3,104						2,792						2,053						1,690						3,664
Continuing operations			$	246,507					$	214,025					$	180,588					$	77,506					$	76,331					$	93,253

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

			Total Assets
			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
Discovery & Analytical Solutions			$	3,600,860					$	3,082,917					$	2,567,054
Diagnostics			4,228,943						3,368,598						3,358,964
Corporate			130,512						87,049						49,504
Total assets			$	7,960,315					$	6,538,564					$	5,975,522

The following geographic area information for continuing operations includes revenue based on location of external customers for the three fiscal years ended January 3, 2021 and net long-lived assets based on physical location as of January 3, 2021 and December 29, 2019:

			Revenue
			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
U.S.			$	1,269,293					$	974,187					$	906,398
International:
China			492,283						581,688						559,865
United Kingdom			362,591						70,703						72,124
Germany			200,294						146,577						142,411
Italy			163,056						101,461						95,908
France			148,898						96,994						97,990
Republic of Korea			114,846						71,069						60,126
India			103,785						97,423						92,327
Japan			88,473						82,478						79,238
Other international			839,226						661,093						671,609
Total international			2,513,452						1,909,486						1,871,598
Total sales			$	3,782,745					$	2,883,673					$	2,777,996

			Net Long-Lived Assets*
			January 3, 2021						December 29, 2019						December 30, 2018
			(In thousands)
U.S.			$	197,755					$	269,183					$	201,649
International:
Germany			149,105						119,612						99,181
China			75,199						71,216						61,261
Finland			60,559						29,052						16,211
United Kingdom			35,243						51,659						33,429
Singapore			24,291						23,063						14,942
India			21,975						19,691						14,636
Italy			17,051						14,152						11,324
France			13,325						12,940						3,210
Brazil			8,627						9,126						8,237
Poland			7,732						7,216						3,212
Canada			5,671						6,485						5,454
Other international			34,625						26,210						17,565
Total international			453,403						390,422						288,662
Total net long-lived assets			$	651,158					$	659,605					$	490,311

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

*** Long-lived assets consist of property and equipment, net, operating lease right-of-use assets, rental equipment, software and other long-term assets.

Note 25: Quarterly Financial Information (Unaudited)

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

			First Quarter						Second Quarter						Third Quarter						Fourth Quarter**(1)**						Year
			(In thousands, except per share data)
January 3, 2021
Revenue			$	652,396					$	811,718					$	964,025					$	1,354,606					$	3,782,745
Gross profit			308,023						447,344						527,445						827,065						2,109,877
Restructuring and other costs, net			5,858						1,158						4,059						(3,062)						8,013
Operating income from continuing operations			44,682						175,639						248,006						510,254						978,581
Income from continuing operations before income taxes			34,689						164,827						233,757						473,091						906,364
Income from continuing operations			33,715						137,213						176,736						380,434						728,098
Loss from discontinued operations and dispositions			(50)						(51)						(37)						(73)						(211)
Net income			33,665						137,162						176,699						380,361						727,887
Basic earnings per share:
Income from continuing operations			$	0.30					$	1.23					$	1.58					$	3.40					$	6.53
Loss from discontinued operations and dispositions			(0.00)						(0.00)						(0.00)						(0.00)						(0.00)
Net income			0.30						1.23						1.58						3.40						6.53
Diluted earnings per share:
Income from continuing operations			$	0.30					$	1.23					$	1.57					$	3.38					$	6.50
Loss from discontinued operations and dispositions			(0.00)						(0.00)						(0.00)						(0.00)						(0.00)
Net income			0.30						1.23						1.57						3.38						6.49
Cash dividends declared per common share			$	0.07					$	0.07					$	0.07					$	0.07					$	0.28
December 29, 2019
Revenue			$	648,737					$	722,517					$	706,923					$	805,496					$	2,883,673
Gross profit			307,806						347,793						342,275						398,181						1,396,055
Restructuring and other costs, net			7,639						6,161						14,068						1,560						29,428
Operating income from continuing operations			53,330						91,735						78,660						138,248						361,973
Income from continuing operations before income taxes			36,765						71,827						63,254						65,296						237,142
Income from continuing operations			35,453						69,141						58,610						64,549						227,753
Loss from discontinued operations and dispositions			(41)						(54)						(52)						(48)						(195)
Net income			35,412						69,087						58,558						64,501						227,558
Basic earnings per share:
Income from continuing operations			$	0.32					$	0.62					$	0.53					$	0.58					$	2.06
Loss from discontinued operations and dispositions			(0.00)						(0.00)						(0.00)						(0.00)						(0.00)
Net income			0.32						0.62						0.53						0.58						2.06
Diluted earnings per share:
Income continuing operations			$	0.32					$	0.62					$	0.53					$	0.58					$	2.04
Loss from discontinued operations and dispositions			(0.00)						(0.00)						(0.00)						(0.00)						(0.00)
Net income			0.32						0.62						0.52						0.58						2.04
Cash dividends declared per common share			$	0.07					$	0.07					$	0.07					$	0.07					$	0.28

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1) The fourth quarter of fiscal year 2020 includes a pre-tax loss of $25.4 million as a result of the mark-to-market adjustment on postretirement benefit plans. The fourth quarter of fiscal year 2019 includes a pre-tax loss of $31.2 million as a result of the mark-to-market adjustment on postretirement benefit plans. See Note 1 for a discussion of this accounting policy.

Note 26: Subsequent Events

Subsequent to fiscal year 2020, the Company reached an agreement with Oxford Immunotec Global PLC (“Oxford Immunotec”) on terms under which the Company has agreed to acquire Oxford Immunotec. It is intended that the acquisition will be implemented by means of a U.K. High Court of Justice-sanctioned scheme of arrangement under Part 26 of the U.K. Companies Act 2006 between Oxford Immunotec and its shareholders (the “Scheme”). Under the terms of the acquisition, Oxford Immunotec shareholders will be entitled to receive $22 in cash for each outstanding ordinary share. The terms of the acquisition value Oxford Immunotec’s entire issued and to be issued ordinary share capital at approximately $591.0 million. The Scheme has been approved by the shareholders of Oxford Immunotec. Subject to the satisfaction of other customary closing conditions, the Company currently anticipates that the transaction will close later this month. Oxford Immunotec is based in Abingdon, UK, has approximately 275 employees, and is widely recognized as a global leader of proprietary test kits for latent tuberculosis. Its Interferon Gamma Release Assay offering identifies individuals who are infected with tuberculosis.