PERKINELMER, INC00000317912021Q2false01/02111,000,0001,000,000————11300,000,000300,000,000112,025,000112,090,000112,025,000112,090,0000.150.200.070.070.070.070.07Stock Plans
The following table summarizes total pre-tax compensation expense recognized related to the Company’s stock option grants, restricted stock awards, performance restricted stock units, performance units and stock awards, included in the Company’s condensed consolidated statements of operations for the three and six months ended July 4, 2021 and July 5, 2020:
  Three Months Ended
  July 4,
2021
July 5,
2020
  (In thousands)
Cost of revenue $ 692  $ 253 
Research and development expenses 366  316 
Selling, general and administrative expenses 6,146  9,034 
Total stock-based compensation expense $ 7,204  $ 9,603 
The total income tax benefit recognized in the condensed consolidated statements of operations for stock-based compensation was $4.1 million and $2.2 million for the three and six months ended July 4, 2021 and July 5, 2020, respectively. Stock-based compensation costs capitalized as part of inventory were $0.5 million and $0.3 million as of July 4, 2021 and July 5, 2020, respectively.
Stock Options: The fair value of each option grant is estimated using the Black-Scholes option pricing model. The Company’s weighted-average assumptions used in the Black-Scholes option pricing model were as follows:
  Three and Six Months Ended
  July 4,
2021
July 5,
2020
Risk-free interest rate 0.6  % 0.9  %
Expected dividend yield 0.2  % 0.3  %
Expected term 5 years 5 years
Expected stock volatility 27.3  % 23.8  %
The following table summarizes stock option activity for the six months ended July 4, 2021:
Number
of
Shares
Weighted-
Average Exercise
Price
Weighted-Average
Remaining
Contractual 
Term
Total
Intrinsic
Value
  (In thousands)   (In years) (In millions)
Outstanding at January 3, 2021 961  $ 74.40 
Granted 162  134.53 
Exercised (96) 53.98 
Forfeited (7) 88.54 
Outstanding at July 4, 2021 1,020  $ 85.78  4.3 $ 46.2 
Exercisable at July 4, 2021 640  $ 72.63  3.2 $ 36.7 
The weighted-average per-share grant-date fair value of options granted during the six months ended July 4, 2021 and July 5, 2020 was $65.80 and $18.98. The total intrinsic value of options exercised during the three and six months ended July 4, 2021 and July 5, 2020 was $9.5 million and $7.8 million, respectively. Cash received from option exercises for the six months ended July 4, 2021 and July 5, 2020 was $5.0 million and $1.1 million, respectively.
The total compensation expense recognized related to the Company’s outstanding options was $0.9 million and $0.8 million for the three and six months ended July 4, 2021 and July 5, 2020, respectively.
There was $8.9 million of total unrecognized compensation cost related to nonvested stock options granted as of July 4, 2021. This cost is expected to be recognized over a weighted-average period of 2.3 years.
Restricted Stock Awards: The following table summarizes restricted stock award activity for the six months ended July 4, 2021:
Number of
Shares
Weighted-
Average
Grant-
Date Fair
Value
  (In thousands)  
Nonvested at January 3, 2021 296  $ 85.67 
Granted 102  129.27 
Vested (102) 83.16 
Forfeited (5) 86.90 
Nonvested at July 4, 2021 291  $ 101.83 
The fair value of restricted stock awards vested during the three and six months ended July 4, 2021 and July 5, 2020 was $8.5 million and $1.4 million, respectively. The total compensation expense recognized related to the Company’s outstanding restricted stock awards was $2.8 million and $2.7 million for the three and six months ended July 4, 2021 and July 5, 2020, respectively.
As of July 4, 2021, there was $23.4 million of total unrecognized compensation cost related to nonvested restricted stock awards. This cost is expected to be recognized over a weighted-average period of 1.8 years.
Performance Restricted Stock Units: As part of the Company's executive compensation program, the Company granted 77,373 performance restricted stock units during the six months ended July 4, 2021 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 the six months ended July 4, 2021 was $113.44. During the six months ended July 4, 2021, no performance restricted stock units were forfeited. The total compensation expense recognized related to performance restricted stock units was $1.4 million and $2.0 million for the three and six months ended July 4, 2021 and July 5, 2020, respectively. As of July 4, 2021, there were 128,386 performance restricted stock units outstanding.
Performance Units: No performance units were granted during the six months ended July 4, 2021. During the six months ended July 4, 2021, no performance units were forfeited. The total compensation expense (income) recognized related to performance units was $0.1 million and $3.3 million for the three and six months ended July 4, 2021 and July 5, 2020, respectively. As of July 4, 2021, there were no performance units outstanding.
Stock Awards: The Company’s stock award program provides an annual equity award to non-employee directors. During the six months ended July 4, 2021, the Company awarded no shares to non-employee directors. The total compensation expense recognized related to the stock awards were minimal for the six months ended July 5, 2020.
Employee Stock Purchase Plan: During the six months ended July 4, 2021, the Company issued 58 shares of common stock under the Company's Employee Stock Purchase Plan at a weighted-average price of $136.33 per share. During the six months ended July 5, 2020, the Company issued 13,612 shares of common stock under the Company's Employee Stock Purchase Plan at a weighted-average price of $92.25 per share. At July 4, 2021, an aggregate of 0.8 million shares of the Company’s common stock remained available for sale to employees out of the 5.0 million shares authorized by shareholders for issuance under this plan.
The following table summarizes total pre-tax compensation expense recognized related to the Company’s stock option grants, restricted stock awards, performance restricted stock units, performance units and stock awards, included in the Company’s condensed consolidated statements of operations for the three and six months ended July 4, 2021 and July 5, 2020:
  Three Months Ended
  July 4,
2021
July 5,
2020
  (In thousands)
Cost of revenue $ 692  $ 253 
Research and development expenses 366  316 
Selling, general and administrative expenses 6,146  9,034 
Total stock-based compensation expense $ 7,204  $ 9,603 
The total income tax benefit recognized in the condensed consolidated statements of operations for stock-based compensation was $4.1 million and $2.2 million for the three and six months ended July 4, 2021 and July 5, 2020, respectively. Stock-based compensation costs capitalized as part of inventory were $0.5 million and $0.3 million as of July 4, 2021 and July 5, 2020, respectively.
6922533663166,1469,0347,2049,6034.12.20.50.3The Company’s weighted-average assumptions used in the Black-Scholes option pricing model were as follows:
  Three and Six Months Ended
  July 4,
2021
July 5,
2020
Risk-free interest rate 0.6  % 0.9  %
Expected dividend yield 0.2  % 0.3  %
Expected term 5 years 5 years
Expected stock volatility 27.3  % 23.8  %
0.60.90.20.35527.323.8
The following table summarizes stock option activity for the six months ended July 4, 2021:
Number
of
Shares
Weighted-
Average Exercise
Price
Weighted-Average
Remaining
Contractual 
Term
Total
Intrinsic
Value
  (In thousands)   (In years) (In millions)
Outstanding at January 3, 2021 961  $ 74.40 
Granted 162  134.53 
Exercised (96) 53.98 
Forfeited (7) 88.54 
Outstanding at July 4, 2021 1,020  $ 85.78  4.3 $ 46.2 
Exercisable at July 4, 2021 640  $ 72.63  3.2 $ 36.7 
96174.40162134.539653.98788.541,02085.784.346.264072.633.236.765.8018.989.57.85.01.10.90.88.92.3The following table summarizes restricted stock award activity for the six months ended July 4, 2021:
Number of
Shares
Weighted-
Average
Grant-
Date Fair
Value
  (In thousands)  
Nonvested at January 3, 2021 296  $ 85.67 
Granted 102  129.27 
Vested (102) 83.16 
Forfeited (5) 86.90 
Nonvested at July 4, 2021 291  $ 101.83 
29685.67102129.2710283.16586.90291101.838.51.42.82.723.41.877,373113.44no1.42.0128,386Nono0.13.3nono58136.3313,61292.250.85.0Warranty 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 condensed consolidated balance sheets.
A summary of warranty reserve activity is as follows:
  Three Months Ended
  July 4,
2021
July 5,
2020
  (In thousands)
Balance at beginning of period $ 12,073  $ 8,812 
Provision charged to income 3,691  2,712 
Payments (6,182) (3,266)
Adjustments to previously provided warranties, net 2,455  1,052 
Foreign currency translation and acquisitions (190) (269)
Balance at end of period $ 11,847  $ 9,041 
A summary of warranty reserve activity is as follows:
  Three Months Ended
  July 4,
2021
July 5,
2020
  (In thousands)
Balance at beginning of period $ 12,073  $ 8,812 
Provision charged to income 3,691  2,712 
Payments (6,182) (3,266)
Adjustments to previously provided warranties, net 2,455  1,052 
Foreign currency translation and acquisitions (190) (269)
Balance at end of period $ 11,847  $ 9,041 
12,0738,8123,6912,7126,1823,2662,4551,05219026911,8479,041Employee Postretirement Benefit Plans
The following table summarizes the components of net periodic pension credit for the Company’s various defined benefit employee pension and postretirement plans:
  Defined Benefit
Pension Benefits
Postretirement
Medical Benefits
  Three Months Ended
  July 4,
2021
July 5,
2020
July 4,
2021
July 5,
2020
  (In thousands)
Service and administrative costs $ 1,338  $ 1,688  $ 15  $ 18 
Interest cost 2,376  3,138  17  23 
Expected return on plan assets (6,121) (5,371) (397) (347)
Net periodic pension credit $ (2,407) $ (545) $ (365) $ (306)
  Defined Benefit
Pension Benefits
Postretirement
Medical Benefits
  Six Months Ended
  July 4,
2021
July 5,
2020
July 4,
2021
July 5,
2020
  (In thousands)
Service and administrative costs $ 2,672  $ 3,595  $ 29  $ 36 
Interest cost 4,753  6,282  34  47 
Expected return on plan assets (12,248) (10,755) (794) (694)
Net periodic benefit credit $ (4,823) $ (878) $ (731) $ (611)
During the six months ended July 4, 2021 and July 5, 2020, the Company contributed $3.7 million and $3.4 million, respectively, in the aggregate, to pension plans outside of the United States. During the six months ended July 4, 2021, the Company contributed $20.0 million to its defined benefit pension plan in the United States for the plan year 2019.
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 of the Company's audited consolidated financial statements and notes included in its 2020 Form 10-K. 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. Service costs for plans in active accrual are included in operating expenses.
The following table summarizes the components of net periodic pension credit for the Company’s various defined benefit employee pension and postretirement plans:
  Defined Benefit
Pension Benefits
Postretirement
Medical Benefits
  Three Months Ended
  July 4,
2021
July 5,
2020
July 4,
2021
July 5,
2020
  (In thousands)
Service and administrative costs $ 1,338  $ 1,688  $ 15  $ 18 
Interest cost 2,376  3,138  17  23 
Expected return on plan assets (6,121) (5,371) (397) (347)
Net periodic pension credit $ (2,407) $ (545) $ (365) $ (306)
  Defined Benefit
Pension Benefits
Postretirement
Medical Benefits
  Six Months Ended
  July 4,
2021
July 5,
2020
July 4,
2021
July 5,
2020
  (In thousands)
Service and administrative costs $ 2,672  $ 3,595  $ 29  $ 36 
Interest cost 4,753  6,282  34  47 
Expected return on plan assets (12,248) (10,755) (794) (694)
Net periodic benefit credit $ (4,823) $ (878) $ (731) $ (611)
1,3381,68815182,3763,13817236,1215,3713973472,4075453653062,6723,59529364,7536,282344712,24810,7557946944,8238787316113.73.420.030Contingent 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 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________ 
FORM 10-Q
_______________________________________ 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 4, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 001-5075
_______________________________________ 
PerkinElmer, Inc.
(Exact name of Registrant as specified in its Charter)
_______________________________________  
Massachusetts   04-2052042
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
940 Winter Street, Waltham, Massachusetts 02451
(Address of principal executive offices) (Zip Code)
(781) 663-6900
(Registrant’s telephone number, including area code)
______________________________________ 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol (s) Name of each exchange on which registered
Common stock, $1 par value per share PKI The New York Stock Exchange
1.875% Notes due 2026 PKI 21A The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. 


Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark whether the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  
As of August 5, 2021, there were outstanding 112,114,149 shares of common stock, $1 par value per share.


TABLE OF CONTENTS
 
    Page
PART I. FINANCIAL INFORMATION
Item 1.
4
4
5
6
7
9
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 6.


3


PART I. FINANCIAL INFORMATION

Item 1.Unaudited Financial Statements

PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) 
  Three Months Ended Six Months Ended
  July 4,
2021
July 5,
2020
July 4,
2021
July 5,
2020
  (In thousands, except per share data)
Product revenue $ 767,759  $ 601,506  $ 1,579,311  $ 1,027,035 
Service revenue 460,712  210,212  956,849  437,079 
Total revenue 1,228,471  811,718  2,536,160  1,464,114 
Cost of product revenue 365,823  240,494  705,135  446,684 
Cost of service revenue 177,454  123,880  360,685  262,063 
Total cost of revenue 543,277  364,374  1,065,820  708,747 
Selling, general and administrative expenses 281,819  221,026  533,229  429,595 
Research and development expenses 65,824  49,521  126,040  98,435 
Restructuring and other costs, net 5,063  1,158  10,807  7,016 
Operating income from continuing operations 332,488  175,639  800,264  220,321 
Interest and other expense (income), net 6,431  10,812  (6,275) 20,805 
Income from continuing operations before income taxes 326,057  164,827  806,539  199,516 
Provision for income taxes 80,089  27,614  181,228  28,588 
Income from continuing operations 245,968  137,213  625,311  170,928 
Loss on disposition of discontinued operations before income taxes —  —  —  — 
Provision for income taxes on discontinued operations and dispositions 38  51  76  101 
Loss from discontinued operations and dispositions (38) (51) (76) (101)
Net income $ 245,930  $ 137,162  $ 625,235  $ 170,827 
Basic earnings per share:
Income from continuing operations $ 2.20  $ 1.23  $ 5.58  $ 1.54 
Loss from discontinued operations and dispositions (0.00) (0.00) (0.00) (0.00)
Net income $ 2.20  $ 1.23  $ 5.58  $ 1.54 
Diluted earnings per share:
Income from continuing operations $ 2.19  $ 1.23  $ 5.56  $ 1.53 
Loss from discontinued operations and dispositions (0.00) (0.00) (0.00) (0.00)
Net income $ 2.19  $ 1.23  $ 5.56  $ 1.53 
Weighted average shares of common stock outstanding:
Basic 111,973  111,329  112,000  111,225 
Diluted 112,417  111,869  112,456  111,756 
Cash dividends declared per common share $ 0.07  $ 0.07  $ 0.14  $ 0.14 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4


PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Three Months Ended Six Months Ended
July 4,
2021
July 5,
2020
July 4,
2021
July 5,
2020
(In thousands)
Net income $ 245,930  $ 137,162  $ 625,235  $ 170,827 
Other comprehensive income (loss):
Foreign currency translation adjustments, net of income taxes 11,724  61,568  (60,581) (17,025)
Unrealized gain (loss) on securities, net of income taxes 11  87  105  (1)
Other comprehensive income (loss) 11,735  61,655  (60,476) (17,026)
Comprehensive income $ 257,665  $ 198,817  $ 564,759  $ 153,801 










The accompanying notes are an integral part of these condensed consolidated financial statements.
5


PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
July 4,
2021
January 3,
2021
  (In thousands, except share and per share data)
Current assets:
Cash and cash equivalents $ 572,810  $ 402,036 
Accounts receivable, net 992,602  1,155,109 
Inventories 513,429  514,567 
Other current assets 181,151  167,208 
Total current assets 2,259,992  2,238,920 
Property, plant and equipment, net 379,065  368,304 
Operating lease right-of-use assets 208,494  207,236 
Intangible assets, net 1,561,534  1,365,693 
Goodwill 3,844,070  3,447,114 
Other assets, net 486,306  333,048 
Total assets $ 8,739,461  $ 7,960,315 
Current liabilities:
Current portion of long-term debt $ 4,669  $ 380,948 
Accounts payable 324,711  327,325 
Accrued expenses and other current liabilities 793,443  943,916 
Total current liabilities 1,122,823  1,652,189 
Long-term debt 2,348,523  1,609,701 
Long-term liabilities 838,974  774,531 
Operating lease liabilities 189,334  188,402 
Total liabilities 4,499,654  4,224,823 
Commitments and contingencies (see Note 14)
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 112,025,000 shares and 112,090,000 shares at July 4, 2021 and January 3, 2021, respectively 112,025  112,090 
Capital in excess of par value 103,394  148,101 
Retained earnings 4,116,825  3,507,262 
Accumulated other comprehensive loss (92,437) (31,961)
Total stockholders’ equity 4,239,807  3,735,492 
Total liabilities and stockholders’ equity $ 8,739,461  $ 7,960,315 
The accompanying notes are an integral part of these condensed consolidated financial statements.
6


PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

 
For the Six-Month Period Ended July 4, 2021
Common
Stock
Amount
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
(In thousands)
Balance, January 3, 2021 $ 112,090  $ 148,101  $ 3,507,262  $ (31,961) $ 3,735,492 
Net income —  —  379,305  —  379,305 
Other comprehensive loss —  —  —  (72,211) (72,211)
Dividends —  —  (7,846) —  (7,846)
Exercise of employee stock options and related income tax benefits 95  4,892  —  —  4,987 
Issuance of common stock for employee stock purchase plans —  —  — 
Purchases of common stock (295) (42,484) —  —  (42,779)
Issuance of common stock for long-term incentive program 176  4,274  —  —  4,450 
Stock compensation —  899  —  —  899 
Balance, April 4, 2021 $ 112,066  $ 115,690  $ 3,878,721  $ (104,172) $ 4,002,305 
Net income —  —  245,930  —  245,930 
Other comprehensive income —  —  —  11,735  11,735 
Dividends —  —  (7,826) —  (7,826)
Exercise of employee stock options and related income tax benefits 128  9,070  —  —  9,198 
Issuance of common stock for employee stock purchase plans 11  1,613  —  —  1,624 
Purchases of common stock (209) (29,936) —  —  (30,145)
Issuance of common stock for long-term incentive program 24  4,998  —  —  5,022 
Stock compensation 1,959  —  —  1,964 
Balance, July 4, 2021 $ 112,025  $ 103,394  $ 4,116,825  $ (92,437) $ 4,239,807 


7


For the Six-Month Period Ended July 5, 2020
Common
Stock
Amount
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
(In thousands)
Balance, December 29, 2019 $ 111,140  $ 90,357  $ 2,811,973  $ (199,646) $ 2,813,824 
Impact of adopting ASU 2016-13 —  —  (1,328) —  (1,328)
Net income —  —  33,665  —  33,665 
Other comprehensive loss —  —  —  (78,681) (78,681)
Dividends —  —  (7,779) —  (7,779)
Exercise of employee stock options and related income tax benefits 21  1,085  —  —  1,106 
Issuance of common stock for employee stock purchase plans 14  1,242  —  —  1,256 
Purchases of common stock (66) (6,276) —  —  (6,342)
Issuance of common stock for long-term incentive program 197  2,831  —  —  3,028 
Stock compensation —  997  —  —  997 
Balance, April 5, 2020 $ 111,306  $ 90,236  $ 2,836,531  $ (278,327) $ 2,759,746 
Net income —  —  137,162  —  137,162 
Other comprehensive loss —  —  —  61,655  61,655 
Dividends —  —  (7,803) —  (7,803)
Exercise of employee stock options and related income tax benefits 175  8,792  —  —  8,967 
Issuance of common stock for employee stock purchase plans 14  1,291  —  —  1,305 
Purchases of common stock (4) (323) —  —  (327)
Issuance of common stock for long-term incentive program 5,123  —  —  5,125 
Stock compensation 1,625  —  —  1,633 
Balance, July 5, 2020 $ 111,501  $ 106,744  $ 2,965,890  $ (216,672) $ 2,967,463 

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

8


PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
  Six Months Ended
  July 4,
2021
July 5,
2020
  (In thousands)
Operating activities:
Net income $ 625,235  $ 170,827 
Loss from discontinued operations and dispositions, net of income taxes 76  101 
Income from continuing operations 625,311  170,928 
Adjustments to reconcile income from continuing operations to net cash provided by continuing operations:
Stock-based compensation 12,361  12,654 
Restructuring and other costs, net 10,807  7,016 
Depreciation and amortization 145,822  120,047 
Loss on disposition of businesses and assets, net —  485 
Change in fair value of contingent consideration 477  (11,446)
Amortization of deferred debt financing costs and accretion of discounts 1,724  1,642 
Change in fair value of financial securities (27,931) — 
Amortization of acquired inventory revaluation 5,303  1,485 
Changes in assets and liabilities which provided (used) cash, excluding effects from companies acquired:
Accounts receivable, net 155,270  4,312 
Inventories 7,239  (126,707)
Accounts payable (26,795) 20,907 
Accrued expenses and other (148,226) (2,677)
Net cash provided by operating activities of continuing operations 761,362  198,646 
Investing activities:
Capital expenditures (34,675) (37,138)
Purchases of investments (14,507) (7,393)
Proceeds from disposition of businesses and assets —  1,815 
Proceeds from surrender of life insurance policies —  131 
Cash paid for acquisitions, net of cash, cash equivalents and restricted cash acquired (702,697) (2,990)
Net cash used in investing activities of continuing operations (751,879) (45,575)
Financing activities:
Payments on borrowings (763,545) (290,000)
Proceeds from borrowings 729,000  188,000 
Payments of senior unsecured notes (339,605) — 
Proceeds from sale of senior unsecured notes 799,856  — 
Payments of debt financing costs (8,242) — 
Settlement of cash flow hedges (5,935) 5,037 
Net payments on other credit facilities (11,826) (6,036)
Payments for acquisition-related contingent consideration —  (5,200)
Proceeds from issuance of common stock under stock plans 14,185  10,074 
Purchases of common stock (72,924) (6,669)
Dividends paid (15,697) (15,572)
Net cash provided by (used in) financing activities of continuing operations 325,267  (120,366)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (10,659) (4,658)
Net increase in cash, cash equivalents and restricted cash 324,091  28,047 
Cash, cash equivalents and restricted cash at beginning of period 402,613  191,894 
Cash, cash equivalents and restricted cash at end of period $ 726,704  $ 219,941 
Supplemental disclosures of cash flow information
Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total shown in the condensed consolidated statements of cash flows:
Cash and cash equivalents $ 572,810  $ 218,536 
Restricted cash included in other current assets 1,750  1,405 
Restricted cash included in other assets 152,144  — 
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows $ 726,704  $ 219,941 

9


The accompanying notes are an integral part of these condensed consolidated financial statements.
10


PERKINELMER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1: Basis of Presentation
The condensed consolidated financial statements included herein have been prepared by PerkinElmer, Inc. (the “Company”), in accordance with accounting principles generally accepted in the United States of America (the “U.S.” or the "United States") and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information in the footnote disclosures of the financial statements has been condensed or omitted where it substantially duplicates information provided in the Company’s latest audited consolidated financial statements, in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in its Annual Report on Form 10-K for the fiscal year ended January 3, 2021, filed with the SEC (the “2020 Form 10-K”). The balance sheet amounts at January 3, 2021 in this report were derived from the Company’s audited 2020 consolidated financial statements included in the 2020 Form 10-K. The condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods indicated. The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and classifications of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for the three and six months ended July 4, 2021 and July 5, 2020, respectively, are not necessarily indicative of the results for the entire fiscal year or any future period.
The Company’s fiscal year ends on the Sunday nearest December 31. The Company reports fiscal years under a 52/53 week format and as a result, certain fiscal years will contain 53 weeks. The fiscal year ending January 2, 2022 ("fiscal year 2021") will include 52 weeks, and the fiscal year ended January 3, 2021 ("fiscal year 2020") included 53 weeks.
Recently Adopted and Issued Accounting Pronouncements: From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the "FASB") and are adopted by the Company as of the specified effective dates. Unless otherwise discussed, such pronouncements did not have or will not have a significant impact on the Company’s consolidated financial position, results of operations and cash flows or do not apply to the Company’s operations.
In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 eliminates certain exceptions and adds guidance to reduce complexity in accounting for income taxes. Specifically, this guidance: (1) removes the intraperiod tax allocation exception to the incremental approach; (2) removes the ownership changes in investments exception in determining when a deferred tax liability is recognized after an investor in a foreign entity transitions to or from the equity method of accounting and applies this provision on a modified retrospective basis through a cumulative-effect adjustment to retained earnings at the beginning of the period of adoption; and (3) removes the exception to using the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. ASU 2019-12 also simplifies accounting principles by making other changes, including requiring an entity to: (1) evaluate whether a step-up in tax basis of goodwill relates to a business combination or a separate transaction; (2) make a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and to apply this provision retrospectively to all periods presented; and (3) recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and apply this provision either retrospectively for all periods presented or on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The provisions of this guidance (except as specifically mentioned above) are to be applied prospectively upon their effective date. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those years. In accordance with ASU 2019-12, the Company adopted the guidance beginning on January 4, 2021. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.
11


Note 2: Revenue

Disaggregation of revenue
In the following tables, revenue is disaggregated by primary geographical markets, primary end-markets and timing of revenue recognition. The tables also include a reconciliation of the disaggregated revenue with the reportable segments' revenue.
Reportable Segments
Three Months Ended
July 4, 2021 July 5, 2020
Discovery & Analytical Solutions Diagnostics Total Discovery & Analytical Solutions Diagnostics Total
(In thousands)
Primary geographical markets
Americas $ 206,938  $ 368,365  $ 575,303  $ 160,382  $ 156,609  $ 316,991 
Europe 145,576  200,777  346,353  103,497  149,867  253,364 
Asia 160,315  146,500  306,815  127,123  114,240  241,363 
$ 512,829  $ 715,642  $ 1,228,471  $ 391,002  $ 420,716  $ 811,718 
Primary end-markets
Diagnostics $ —  $ 715,642  $ 715,642  $ —  $ 420,716  $ 420,716 
Life sciences 308,681  —  308,681  237,120  —  237,120 
Applied markets 204,148  —  204,148  153,882  —  153,882 
$ 512,829  $ 715,642  $ 1,228,471  $ 391,002  $ 420,716  $ 811,718 
Timing of revenue recognition
Products and services transferred at a point in time $ 378,310  $ 506,603  $ 884,913  $ 265,903  $ 398,646  $ 664,549 
Services transferred over time 134,519  209,039  343,558  125,099  22,070  147,169 
$ 512,829  $ 715,642  $ 1,228,471  $ 391,002  $ 420,716  $ 811,718 

12


Reportable Segments
Six Months Ended
July 4, 2021 July 5, 2020
Discovery & Analytical Solutions Diagnostics Total Discovery & Analytical Solutions Diagnostics Total
(In thousands)
Primary geographical markets
Americas $ 382,053  $ 769,292  $ 1,151,345  $ 329,498  $ 261,766  $ 591,264 
Europe 281,034  512,520  793,554  222,154  231,466  453,620 
Asia 304,351  286,910  591,261  237,745  181,485  419,230 
$ 967,438  $ 1,568,722  $ 2,536,160  $ 789,397  $ 674,717  $ 1,464,114 
Primary end-markets
Diagnostics $ —  $ 1,568,722  $ 1,568,722  $ —  $ 674,717  $ 674,717 
Life sciences 585,882  —  585,882  482,853  —  482,853 
Applied markets 381,556  —  381,556  306,544  —  306,544 
$ 967,438  $ 1,568,722  $ 2,536,160  $ 789,397  $ 674,717  $ 1,464,114 
Timing of revenue recognition
Products and services transferred at a point in time $ 704,972  $ 1,121,709  $ 1,826,681  $ 533,810  $ 630,299  $ 1,164,109 
Services transferred over time 262,466  447,013  709,479  255,587  44,418  300,005 
$ 967,438  $ 1,568,722  $ 2,536,160  $ 789,397  $ 674,717  $ 1,464,114 

Major Customer Concentration
Revenues from one customer in the Company's Diagnostics segment represent approximately $192.5 million and $398.0 million of the Company's total revenue for the three and six months ended July 4, 2021.
Contract Balances
Contract assets: The unbilled receivables (contract assets) primarily relate to the Company's right to consideration for work completed but not billed at the reporting date. The unbilled receivables are transferred to trade receivables when billed to customers. Contract assets are generally classified as current assets and are included in "Accounts receivable, net" in the consolidated balance sheets. The balance of contract assets as of July 4, 2021 and January 3, 2021 were $51.9 million and $59.5 million, respectively. The amount of unbilled receivables recognized at the beginning of the period that were transferred to trade receivables during the six months ended July 4, 2021 was $46.2 million. The increase in unbilled receivables during the six months ended July 4, 2021 as a result of recognition of revenue before billing to customers, excluding amounts transferred to trade receivables during the period, amounted to $38.6 million.
Contract liabilities: The contract liabilities primarily relate to the advance consideration received from customers for products and related installation for which transfer of control has not occurred at the balance sheet date. Contract liabilities are classified as either current in "Accounts payable" or "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 balance of contract liabilities as of July 4, 2021 and January 3, 2021 were $230.7 million and $238.1 million, respectively. The increase in contract liabilities during the six months ended July 4, 2021 due to cash received, excluding amounts recognized as revenue during the period, was $49.6 million. The amount of revenue recognized during the six months ended July 4, 2021 that was included in the contract liability balance at the beginning of the period was $57.1 million.
Contract costs: The Company recognizes the incremental costs of obtaining a contract with a customer as an asset if it expects the benefit of those costs to be longer than one year. The Company determined that certain sales incentive programs meet the requirements to be capitalized. Total capitalized costs to obtain a contract were immaterial during the period and are included in other current and long-term assets on the consolidated balance sheets. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year
13


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 2021
During the first six months of fiscal year 2021, the Company completed the acquisition of three businesses for aggregate consideration of $860.5 million. The acquired businesses include Oxford Immunotec Global PLC ("Oxford"), a company based in Abingdon, UK with approximately 275 employees, for a total consideration of $590.9 million, Nexcelom Bioscience Holdings, LLC ("Nexcelom"), a company based in Lawrence, Massachusetts with approximately 130 employees, for a total consideration of $267.1 million, and one other business, which was acquired for a total consideration of $2.5 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 employee workforces acquired, and has been allocated to goodwill, which is not tax deductible. 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 11.9 years.
The total purchase price for the acquisitions in fiscal year 2021 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:
Preliminary
  (In thousands)
Fair value of business combination:
Cash payments $ 859,548 
Other liability 910 
Less: cash acquired (157,278)
Total $ 703,180 
Identifiable assets acquired and liabilities assumed:
Current assets $ 35,265 
Property, plant and equipment 13,293 
Other assets 15,187 
Identifiable intangible assets:
Core technology 193,260 
Trade names 26,070 
Patents 150 
Customer relationships 104,270 
Goodwill 428,923 
Deferred taxes (68,821)
Liabilities assumed (44,417)
Total $ 703,180 
14


During the second quarter of fiscal year 2021, the Company entered into an agreement to acquire SIRION Biotech GmbH ("Sirion"), a leading, global provider of viral vector-based technologies headquartered in Munich, Germany with approximately 50 employees that drive improved delivery performance for cell and gene therapies. The total consideration is approximately $94.8 million (€80.0 million) in cash and a potential obligation to pay the shareholders of Sirion additional contingent consideration of up to $85.3 million (€72.0 million). The acquisition is expected to close during the third quarter of fiscal year 2021.
Subsequent to July 4, 2021, the Company completed the acquisition of Immunodiagnostic Systems Holdings PLC, a company headquartered in Boldon, the United Kingdom, for a total consideration of approximately $155.0 million (£110.0 million) in cash. The operations for this acquisition will be reported within the results of the Company's Diagnostics segment from the acquisition date.
Subsequent to July 4, 2021, the Company entered into an agreement to acquire BioLegend, Inc. ("BioLegend"), a leading, global provider of life science antibodies and reagents headquartered in San Diego, California with approximately 700 employees, for approximately $5.25 billion in a combination of cash and stock, subject to certain adjustments. The operations for this acquisition will be reported within the results of the Company's Discovery & Analytical Solutions segment from the acquisition date. The acquisition is expected to close by the end of fiscal year 2021, subject to regulatory approvals and other customary closing conditions.
Acquisitions in fiscal year 2020
During the fiscal year 2020, the Company completed the acquisition of four businesses for aggregate consideration of $438.9 million. The acquired businesses were 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 $399.8 million (£296.0 million), and three other businesses, which were acquired for a total consideration of $39.1 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. Identifiable definite-lived intangible assets, such as core technology, trade names, customer relationships and in-process research and development, acquired as part of these acquisitions had a weighted average amortization period of 11.0 years.

The total purchase price for the acquisitions in fiscal year 2020 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:
Preliminary
(In thousands)
Fair value of business combination:
Cash payments $ 437,661 
Other liability 1,660 
Working capital and other adjustments (384)
Less: cash acquired (26,840)
Total $ 412,097 
Identifiable assets acquired and liabilities assumed:
Current assets $ 35,532 
Property, plant and equipment 20,302 
Other assets 18,114 
Identifiable intangible assets:
Core technology 65,730 
Trade names 5,580 
Customer relationships 108,523 
Goodwill 221,960 
Deferred taxes (27,142)
Deferred revenue (2,031)
Liabilities assumed (45,171)
Total $ 412,097 
15


The preliminary allocations of the purchase prices for acquisitions are based upon initial valuations. The Company's estimates and assumptions underlying the initial valuations are subject to the collection of information necessary to complete its valuations within the measurement periods, which are up to one year from the respective acquisition dates. The primary areas of the preliminary purchase price allocations that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired and liabilities assumed, assets and liabilities related to income taxes and related valuation allowances, and residual goodwill. The Company expects to continue to obtain information to assist in determining the fair values of the net assets acquired at the acquisition dates during the measurement periods. During the measurement periods, the Company will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition dates that, if known, would have resulted in the recognition of those assets and liabilities as of those dates. These adjustments will be made in the periods in which the amounts are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition dates. All changes that do not qualify as adjustments made during the measurement periods are also included in current period earnings.
The allocations of the purchase prices 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.
As of July 4, 2021, the Company may have to pay contingent consideration related to acquisitions with open contingency periods of up to $7.2 million. As of July 4, 2021, the Company has recorded contingent consideration obligations of $3.3 million, of which $3.2 million was recorded in accrued expenses and other current liabilities, and $0.1 million was recorded in long-term liabilities. As of January 3, 2021, the Company had recorded contingent consideration obligations with an estimated fair value 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. The expected maximum earnout period for acquisitions with open contingency periods does not exceed 1.5 years from July 4, 2021, and the remaining weighted average expected earnout period at July 4, 2021 was 0.8 years. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the condensed consolidated financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of definite-lived intangible assets or the recognition of additional contingent consideration which would be recognized as a component of operating expenses from continuing operations.
Total acquisition and divestiture-related costs for the three and six months ended July 4, 2021 were $10.6 million and $15.1 million, respectively. These amounts included $6.3 million and $11.7 million of incentive award associated with the Company's acquisition of Meizheng Group for the three and six months ended July 4, 2021, respectively. Net foreign exchange gain and interest expense related to the Company's acquisition of Oxford for the six months ended July 4, 2021 amounted to $5.4 million and $0.2 million, respectively. Total acquisition and divestiture-related costs (gains) for the three and six months ended July 5, 2020 were $(5.2) million and $7.1 million, respectively. These amounts included $(5.6) million and $6.7 million of incentive award associated with the Company's acquisition of Meizheng Group for the three and six months ended July 5, 2020, respectively. These acquisition and divestiture-related costs were expensed as incurred and recorded in selling, general and administrative expenses and interest and other expense, net in the Company's consolidated statements of operations.

Note 4: Restructuring and Other Costs, Net
The Company implemented restructuring plans in the first and second quarters of fiscal year 2021 consisting of workforce reductions principally intended to realign resources to emphasize growth initiatives and integrate new acquisitions (the "Q1 2021 Plan" and "Q2 2021 Plan", respectively). 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 (the "Q3 2020 Plan"). 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"). Details of the plans initiated in previous years (the “Previous Plans”) are discussed more fully in Note 5 to the audited consolidated financial statements in the 2020 Form 10-K.
The following table summarizes the reductions in headcount, the initial restructuring or contract termination charges by reporting segment, and the dates by which payments were substantially completed, or the dates by which payments are expected to be substantially completed, for restructuring actions implemented during fiscal years 2021 and 2020 in continuing operations:
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Workforce Reductions Closure of Excess Facility Total (Expected) Date Payments Substantially Completed by
Headcount Reduction Discovery & Analytical Solutions Diagnostics Discovery & Analytical Solutions Diagnostics Severance Excess Facility
(In thousands, except headcount data)
Q2 2021 Plan 25 $ 968  $ 564  $ —  $ —  $ 1,532  Q1 FY2022
Q1 2021 Plan 77 3,941  1,615  —  —  5,556  Q4 FY2021
Q3 2020 Plan 23 2,080  901  —  —  2,981  Q2 FY2021
Q1 2020 Plan 32 2,312  1,134  92  682  4,220  Q4 FY2020 Q1 FY2022
The Company has terminated various contractual commitments in connection with certain disposal activities and has recorded charges 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 net pre-tax charges of $0.4 million and $0.7 million in the Discovery & Analytical Solutions segment and Diagnostics segment, respectively, during each of the three and six months ended July 4, 2021 as a result of these contract terminations.
The Company recorded pre-tax charges of $2.3 million and $2.5 million associated with relocating facilities during the three and six months ended July 4, 2021, respectively, in the Discovery & Analytical Solutions segment. The Company recorded pre-tax charges of $0.2 million associated with relocating facilities during each of the three and six months ended July 4, 2021, in the Diagnostics segment. The Company expects to make payments on these relocation activities through end of fiscal year 2022.

Note 5: Interest and Other Expense, Net

Interest and other expense, net, consisted of the following:
  Three Months Ended Six Months Ended
  July 4,
2021
July 5,
2020
July 4,
2021
July 5,
2020
  (In thousands)
Interest income $ (367) $ (192) $ (778) $ (457)
Interest expense 16,750  11,586  30,876  25,251 
Change in fair value of financial securities
(8,633) —  (27,931) — 
Other income, net (1,319) (582) (8,442) (3,989)
Total interest and other (income) expense, net $ 6,431  $ 10,812  $ (6,275) $ 20,805 
Foreign currency transaction (gains) losses were $(0.8) million and $0.6 million for the three and six months ended July 4, 2021, respectively. Foreign currency transaction (gains) losses were $(6.4) million and $3.5 million for the three and six months ended July 5, 2020, respectively. Net losses (gains) from forward currency hedge contracts were $3.3 million and $(1.5) million for the three and six months ended July 4, 2021, respectively. Net losses (gains) from forward currency hedge contracts were $7.6 million and $(4.0) million for the three and six months ended July 5, 2020, respectively.

Note 6: Inventories

Inventories consisted of the following:
July 4,
2021
January 3,
2021
  (In thousands)
Raw materials $ 199,770  $ 205,022 
Work in progress 40,646  35,160 
Finished goods 273,013  274,385 
Total inventories $ 513,429  $ 514,567 

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Note 7: Debt

The Company’s debt consisted of the following:

July 4,
2021
Outstanding Principal
Unamortized Debt Discount
Unamortized Debt Issuance Costs
Net Carrying Amount
(In thousands)
Long-Term Debt:
Senior Unsecured Revolving Credit Facility $ 125,000  $ —  $ (2,264) $ 122,736 
1.875% Senior Unsecured Notes due in 2026 ("2026 Notes") 592,300  (2,904) (2,531) 586,865 
3.3% Senior Unsecured Notes due in 2029 ("2029 Notes") 850,000  (2,368) (6,556) 841,076 
2.55% Senior Unsecured Notes due in 2031 400,000  (136) (3,563) 396,301 
3.625% Senior Unsecured Notes due in 2051 400,000  (4) (4,545) 395,451 
Other Debt Facilities, non-current 6,094  —  —  6,094 
   Total Long-Term Debt $ 2,373,394  $ (5,412) $ (19,459) $ 2,348,523 
Current Portion of Long-term Debt:
Other Debt Facilities, current 4,669  —  —  4,669 
   Total $ 2,378,063  $ (5,412) $ (19,459) $ 2,353,192 



January 3,
2021
Outstanding Principal
Unamortized Debt Discount
Unamortized Debt Issuance Costs
Net Carrying Amount
(In thousands)
Long-Term Debt:
Senior Unsecured Revolving Credit Facility $ 158,595  $ —  $ (2,621) $ 155,974 
2026 Notes 610,750  (3,253) (2,782) 604,715 
2029 Notes 850,000  (2,496) (6,908) 840,596 
Other Debt Facilities, non-current 8,416  —  —  8,416 
   Total Long-Term Debt $ 1,627,761  $ (5,749) $ (12,311) $ 1,609,701 
Current Portion of Long-term Debt:
0.6% Senior Unsecured Notes due in 2021 ("2021 Notes") 366,450  (16) (229) 366,205 
Other Debt Facilities, current 14,743  —  —  14,743 
   Total $ 2,008,954  $ (5,765) $ (12,540) $ 1,990,649 
2.55% Senior Unsecured Notes due in 2031. On March 8, 2021, the Company issued $400.0 million aggregate principal amount of senior unsecured notes due in 2031 (the "2031 Notes”) in a registered public offering and received $399.9 million of net proceeds from the issuance. The 2031 Notes were issued at 99.965% of the principal amount, which resulted in a discount of $0.1 million. As of July 4, 2021, the 2031 Notes had an aggregate carrying value of $396.3 million, net of $0.1 million of unamortized original issue discount and $3.6 million of unamortized debt issuance costs. The 2031 Notes mature in March 2031 and bear interest at an annual rate of 2.55%. Interest on the 2031 Notes is payable semi-annually on March 15th and September 15th each year. Prior to December 15, 2030 (three months prior to their maturity date), the Company may redeem the 2031 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 (1) 100% of the principal amount of the 2031 Notes to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued but unpaid as of the date of redemption) assuming that the 2031 Notes matured on December 15, 2030, discounted to 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
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governing the 2031 Notes) plus 15 basis points, plus accrued and unpaid interest thereon to, but excluding, the date of redemption. At any time on or after December 15, 2030, the Company may redeem the 2031 Notes, in whole or in part, at the Company’s option, at a redemption price equal to 100% of the principal amount of the 2031 Notes due to be redeemed plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. Upon a change of control repurchase event (as defined in the indenture governing the 2031 Notes) of the Company, the Company will, in certain circumstances, make an offer to repurchase the 2031 Notes at a price equal to 101% of their principal amount plus any accrued and unpaid interest, if any, to, but excluding, the date of repurchase.
3.625% Senior Unsecured Notes due in 2051. On March 8, 2021, the Company issued $400.0 million aggregate principal amount of senior unsecured notes due in 2051 (the "2051 Notes”) in a registered public offering and received $400.00 million of net proceeds from the issuance. The 2051 Notes were issued at 99.999% of the principal amount, which resulted in a discount of $4,000. As of July 4, 2021, the 2051 Notes had an aggregate carrying value of $395.5 million, net of $4,000 of unamortized original issue discount and $4.5 million of unamortized debt issuance costs. The 2051 Notes mature in March 2051 and bear interest at an annual rate of 3.625%. Interest on the 2051 Notes is payable semi-annually on March 15th and September 15th each year. Prior to September 15, 2050 (six months prior to their maturity date), the Company may redeem the 2051 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 (1) 100% of the principal amount of the 2051 Notes to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued but unpaid as of the date of redemption) assuming that the 2051 Notes matured on September 15, 2050, discounted to 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 2051 Notes) plus 20 basis points, plus accrued and unpaid interest thereon to, but excluding, the date of redemption. At any time on or after September 15, 2050, the Company may redeem the 2051 Notes, in whole or in part, at the Company’s option, at a redemption price equal to 100% of the principal amount of the 2051 Notes due to be redeemed plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. Upon a change of control repurchase event (as defined in the indenture governing the 2051 Notes) of the Company, the Company will, in certain circumstances, make an offer to repurchase the 2051 Notes at a price equal to 101% of their principal amount plus any accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

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:
  Three Months Ended Six Months Ended
  July 4,
2021
July 5,
2020
July 4,
2021
July 5,
2020
  (In thousands)
Number of common shares—basic 111,973  111,329  112,000  111,225 
Effect of dilutive securities:
Stock options 344  470  352  475 
Restricted stock awards 100  70  104  56 
Number of common shares—diluted 112,417  111,869  112,456  111,756 
Number of potentially dilutive securities excluded from calculation due to antidilutive impact 224  390  193  440 
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: Industry Segment 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 to the audited consolidated financial statements in the 2020 Form 10-K.
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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, immunodiagnostics 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.
Revenue and operating income (loss) from continuing operations by operating segment are shown in the table below: 
  Three Months Ended Six Months Ended
  July 4,
2021
July 5,
2020
July 4,
2021
July 5,
2020
  (In thousands)
Discovery & Analytical Solutions
Product revenue $ 318,085  $ 225,617  $ 585,340  $ 440,973 
Service revenue 194,744  165,385  382,098  348,424 
Total revenue 512,829  391,002  967,438  789,397 
Operating income from continuing operations 64,155  39,430  107,102  67,943 
Diagnostics
Product revenue 449,674  375,889  993,971  586,062 
Service revenue 265,968  44,827  574,751  88,655 
Total revenue 715,642  420,716  1,568,722  674,717 
Operating income from continuing operations 286,280  160,300  727,747  189,891 
Corporate
Operating loss from continuing operations (17,947) (24,091) (34,585) (37,513)
Continuing Operations
Product revenue 767,759  601,506  1,579,311  1,027,035 
Service revenue 460,712  210,212  956,849  437,079 
Total revenue 1,228,471  811,718  2,536,160  1,464,114 
Operating income from continuing operations 332,488  175,639  800,264  220,321 
Interest and other expense (income), net (see Note 5) 6,431  10,812  (6,275) 20,805 
Income from continuing operations before income taxes $ 326,057  $ 164,827  $ 806,539  $ 199,516 

Note 10: Stockholders’ Equity
Comprehensive Income:
The components of accumulated other comprehensive loss consisted of the following:
July 4,
2021
January 3,
2021
  (In thousands)
Foreign currency translation adjustments, net of income taxes $ (91,518) $ (30,937)
Unrecognized prior service costs, net of income taxes (747) (747)
Unrealized net losses on securities, net of income taxes (172) (277)
Accumulated other comprehensive loss $ (92,437) $ (31,961)
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Stock Repurchases:
On July 31, 2020, the Company's 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 will expire on July 27, 2022 unless terminated earlier by the Board and may be suspended or discontinued at any time. During the three months ended July 4, 2021, the Company repurchased 200,000 shares of common stock under the Repurchase Program for an aggregate cost of $29.0 million. During the six months ended July 4, 2021, the Company repurchased 433,000 shares of common stock under the Repurchase Program for an aggregate cost of $62.6 million. As of July 4, 2021, $187.4 million remained available for aggregate repurchases of shares under the Repurchase Program.
In addition, the Board has authorized the Company to repurchase shares of common stock to satisfy minimum statutory tax withholding obligations in connection with the vesting of restricted stock awards and restricted stock unit awards granted pursuant to the Company’s equity incentive plans and to satisfy obligations related to the exercise of stock options made pursuant to the Company's equity incentive plans. During the three months ended July 4, 2021, the Company repurchased 8,622 shares of common stock for this purpose at an aggregate cost of $1.2 million. During the six months ended July 4, 2021, the Company repurchased 70,413 shares of common stock for this purpose at an aggregate cost of $10.3 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 for each of the first two quarters of fiscal year 2021 and in each quarter of fiscal year 2020. At July 4, 2021, the Company had accrued $7.9 million for dividends declared on April 29, 2021 for the second quarter of fiscal year 2021 that were paid on August 6, 2021. On July 23, 2021, the Company announced that the Board had declared a quarterly dividend of $0.07 per share for the third quarter of fiscal year 2021 that will be payable in November 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 11: 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 4, 2021, its annual impairment testing date for fiscal year 2021. The Company concluded 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 Company's Tulip reporting unit which had a fair value that was between 10% and 20% more than its carrying value. The range of the long-term terminal growth rates for the Company’s reporting units was 3% to 5% for the fiscal year 2021 impairment analysis. The range for the discount rates for the reporting units was 8.0% to 12.5%. Keeping all other variables constant, a 10% change in any one of these input assumptions for the various reporting units, except for the Tulip reporting unit, would still allow the Company to conclude that there was no impairment of goodwill. As of January 4, 2021, the Company's Tulip reporting unit, which had a goodwill balance of $77.8 million, was 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 currently expect 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.
The Company has consistently employed the income approach to estimate the current fair value when testing for impairment of goodwill. A number of significant assumptions and estimates are involved in the application of the income approach to forecast operating cash flows, including markets and market share, sales volumes and prices, costs to produce, tax rates, capital spending, discount rates and working capital changes. Cash flow forecasts are based on approved business unit operating plans for the early years’ cash flows and historical relationships in later years. The income approach is sensitive to changes in long-term terminal growth rates and the discount rates. The long-term terminal growth rates are consistent with the Company’s historical long-term terminal growth rates, as the current economic trends are not expected to affect the long-term terminal growth rates of the Company. The Company corroborates the income approach with a market approach.
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Non-amortizing intangibles are also subject to an annual impairment test. The Company has consistently employed the relief from royalty model to estimate the current fair value when testing for impairment of non-amortizing intangible assets. The impairment test consists of a comparison of the fair value of the non-amortizing intangible asset with its carrying amount. If the carrying amount of a non-amortizing intangible asset exceeds its fair value, an impairment loss in an amount equal to that excess is recognized up to the amount of the amortizing intangible asset. In addition, the Company evaluates the remaining useful life of its non-amortizing intangible asset at least annually to determine whether events or circumstances continue to support an indefinite useful life. If events or circumstances indicate that the useful life of the Company's 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 Company performed its annual impairment testing as of January 4, 2021 and concluded that there was no impairment of its non-amortizing intangible asset. An assessment of the recoverability of amortizing intangible assets takes place when events have occurred that may give rise to an impairment. No such events occurred during the first six months of fiscal year 2021.
The changes in the carrying amount of goodwill for the six months ended July 4, 2021 were as follows:
Discovery & Analytical Solutions Diagnostics Consolidated
  (In thousands)
Balance at January 3, 2021 $ 1,755,887  $ 1,691,227  $ 3,447,114 
        Foreign currency translation (19,151) (17,806) (36,957)
        Acquisitions, earn-outs and other 155,199  278,714  433,913 
Balance at July 4, 2021 $ 1,891,935  $ 1,952,135  $ 3,844,070 
Identifiable intangible asset balances by category were as follows:
July 4,
2021
January 3,
2021
  (In thousands)
Patents $ 31,042  $ 30,855 
Less: Accumulated amortization (28,590) (28,440)
Net patents 2,452  2,415 
Trade names and trademarks 122,959  98,661 
Less: Accumulated amortization (54,468) (48,806)
Net trade names and trademarks 68,491  49,855 
Licenses 59,015  58,700 
Less: Accumulated amortization (53,391) (52,452)
Net licenses 5,624  6,248 
Core technology 980,388  789,799 
Less: Accumulated amortization (435,709) (398,992)
Net core technology 544,679  390,807 
Customer relationships 1,441,419  1,357,660 
Less: Accumulated amortization (582,624) (522,820)
Net customer relationships 858,795  834,840 
In-process research and development 10,909  10,944 
Net amortizable intangible assets 1,490,950  1,295,109 
Non-amortizing intangible asset:
Trade name 70,584  70,584 
Total $ 1,561,534  $ 1,365,693 
Total amortization expense related to definite-lived intangible assets was $59.6 million and $113.7 million for the three and six months ended July 4, 2021, respectively, and $46.7 million and $94.0 million for the three and six months ended July 5, 2020, respectively. Estimated amortization expense related to amortizable intangible assets for each of the next five
22


years is $116.8 million for the remainder of fiscal year 2021, $224.2 million for fiscal year 2022, $200.9 million for fiscal year 2023, $180.1 million for fiscal year 2024, and $151.3 million for fiscal year 2025.

Note 12: 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 condensed 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 condensed consolidated statement of cash flows.
Principal hedged currencies include the Australian Dollar, British Pound, 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 $444.7 million, $808.0 million and $358.7 million at July 4, 2021, January 3, 2021 and July 5, 2020, respectively, 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 the six months ended July 4, 2021 and July 5, 2020.
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 condensed 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 condensed consolidated statement 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 U.S. Dollar notional amounts of $309.4 million as of July 4, 2021, combined Euro notional amounts of €33.4 million and combined U.S. Dollar notional amounts of $499.0 million as of January 3, 2021, and combined Euro notional amounts of €104.8 million and combined U.S. Dollar notional amounts of $267.0 million as of July 5, 2020. 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 three and six months ended July 4, 2021 and July 5, 2020. The Company paid $5.9 million and received $5.0 million during the six months ended July 4, 2021 and July 5, 2020, respectively, from the settlement of these hedges.
During fiscal year 2018, the Company designated a portion of the 2026 Notes to hedge its net investments in certain foreign subsidiaries. Unrealized translation adjustments from a portion of the 2026 Notes were included in the foreign currency translation component of accumulated other comprehensive income ("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 July 4, 2021, the total notional amount of the 2026 Notes that was designated to hedge net investments in foreign subsidiaries was €299.7 million. The unrealized foreign exchange losses (gains) recorded in AOCI related to the net investment hedge were $2.5 million and $(19.1) million for the three and six months ended July 4, 2021, respectively, and $22.3 million and $1.3 million for the three and six months ended July 5, 2020, 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
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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%. At July 4, 2021, the fair value of the cross-currency swap was a $13.0 million loss, which was recorded in AOCI.
During fiscal year 2020, the Company entered into a 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 were reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affected earnings. During the second quarter of fiscal year 2021, the Company redeemed all of its outstanding 2021 Notes and settled the forward foreign exchange contracts that were designated as cash flow hedges. The unrealized foreign exchange (gains) losses recorded in earnings related to the cash flow hedges were $(4.1) million and $9.5 million for the three and six months ended July 4, 2021, respectively, and $(3.8) million for each of the three and six months ended July 5, 2020.
During fiscal year 2021, the Company entered into forward foreign exchange contracts, designated as a cash flow hedge, to hedge a portion of the 2026 Notes. The effective portion of the gain or loss of the cash flow hedge 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 July 4, 2021, the total notional amount of the forward foreign exchange contracts that was designated as cash flow hedges was €197.4 million. The unrealized foreign exchange gains recorded in earnings related to the cash flow hedge were $1.7 million and $0.8 million for the three and six months ended July 4, 2021.
The Company does not expect any material net pre-tax gains or losses to be reclassified from accumulated other comprehensive loss into interest and other expense, net within the next twelve months.

Note 13: 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 July 4, 2021.
The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during the six months ended July 4, 2021. 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.
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The following tables show the assets and liabilities carried at fair value measured on a recurring basis as of July 4, 2021 and January 3, 2021 classified in one of the three classifications described above:
  Fair Value Measurements at July 4, 2021 Using:
  Total Carrying Value at July 4, 2021 Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
  (In thousands)
Marketable securities $ 50,100  $ 50,100  $ —  $ — 
Foreign exchange derivative assets 2,663  —  2,663  — 
Foreign exchange derivative liabilities (13,670) —  (13,670) — 
Contingent consideration (3,334) —  —  (3,334)
 
  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)
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 condensed consolidated balance sheet on a net basis and are recorded in other assets. As of both July 4, 2021 and January 3, 2021, 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.
The fair values of contingent consideration are calculated on a quarterly basis based on a collaborative effort of the Company’s operations, finance and accounting groups, as appropriate. Potential valuation adjustments are made as additional information becomes available, including the progress towards achieving the revenue targets as compared to initial projections, with the impact of such adjustments being recorded in the Company's consolidated statements of operations.
As of July 4, 2021, the Company may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $7.2 million. The expected maximum earnout period for the acquisitions with open contingency periods does not exceed 1.5 years from July 4, 2021, and the remaining weighted average expected earnout period at July 4, 2021 was 0.8 years.
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A reconciliation of the beginning and ending Level 3 net liabilities for contingent consideration is as follows:
  Three Months Ended Six Months Ended
  July 4,
2021
July 5,
2020
July 4,
2021
July 5,
2020
  (In thousands)
Balance at beginning of period $ (3,124) $ (22,777) $ (2,953) $ (35,481)
Amounts paid and foreign currency translation 27  9,930  96  10,309 
Change in fair value (included within selling, general and administrative expenses) (237) (879) (477) 11,446 
Balance at end of period $ (3,334) $ (13,726) $ (3,334) $ (13,726)
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