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EX-31.2 - SECTION 302 CFO CERTIFICATION - PERKINELMER INCpki-10042015xex_312.htm
EX-31.1 - SECTION 302 CEO CERTIFICATION - PERKINELMER INCpki-10042015xex_311.htm
EX-32.1 - SECTION 906 CEO AND CFO CERTIFICATION - PERKINELMER INCpki-10042015xex_321.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________ 
FORM 10-Q
_______________________________________ 
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 4, 2015
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)
_______________________________________ 
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  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer
 
ý
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨ (Do not check if a smaller reporting company)
Smaller reporting company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
As of November 5, 2015, there were outstanding 111,934,189 shares of common stock, $1 par value per share.



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



2


PART I. FINANCIAL INFORMATION

Item 1.
Unaudited Financial Statements

PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) 
 
Three Months Ended
 
Nine Months Ended
 
October 4,
2015
 
September 28,
2014
 
October 4,
2015
 
September 28,
2014
 
(In thousands, except per share data)
Product revenue
$
378,325

 
$
365,933

 
$
1,126,356

 
$
1,113,027

Service revenue
185,111

 
176,116

 
527,887

 
515,802

Total revenue
563,436

 
542,049

 
1,654,243

 
1,628,829

Cost of product revenue
193,375

 
190,041

 
579,659

 
580,974

Cost of service revenue
115,458

 
108,699

 
332,095

 
320,849

Total cost of revenue
308,833

 
298,740

 
911,754

 
901,823

Selling, general and administrative expenses
147,728

 
142,997

 
440,343

 
442,687

Research and development expenses
31,095

 
30,444

 
95,898

 
90,175

Restructuring and contract termination charges, net
(118
)
 
11,092

 
4,838

 
13,969

Operating income from continuing operations
75,898

 
58,776

 
201,410

 
180,175

Interest and other expense, net
11,944

 
10,966

 
32,208

 
31,219

Income from continuing operations before income taxes
63,954

 
47,810

 
169,202

 
148,956

Provision for income taxes
9,057

 
4,912

 
24,998

 
19,104

Income from continuing operations
54,897

 
42,898

 
144,204

 
129,852

Gain (loss) from discontinued operations before income taxes
8

 
(1,091
)
 
6

 
(4,205
)
Loss on disposition of discontinued operations before income taxes
(3
)
 
(7
)
 
(26
)
 
(381
)
Provision for (benefit from) income taxes on discontinued operations and dispositions
39

 
(477
)
 
13

 
(1,725
)
Loss from discontinued operations and dispositions
(34
)
 
(621
)
 
(33
)
 
(2,861
)
Net income
$
54,863

 
$
42,277

 
$
144,171

 
$
126,991

Basic earnings per share:
 
 
 
 
 
 
 
Income from continuing operations
$
0.49

 
$
0.38

 
$
1.28

 
$
1.15

Loss from discontinued operations and dispositions
(0.00
)
 
(0.01
)
 
(0.00
)
 
(0.03
)
Net income
$
0.49

 
$
0.38

 
$
1.28

 
$
1.13

Diluted earnings per share:
 
 
 
 
 
 
 
Income from continuing operations
$
0.48

 
$
0.38

 
$
1.27

 
$
1.14

Loss from discontinued operations and dispositions
(0.00
)
 
(0.01
)
 
(0.00
)
 
(0.03
)
Net income
$
0.48

 
$
0.37

 
$
1.27

 
$
1.12

Weighted average shares of common stock outstanding:
 
 
 
 
 
 
 
Basic
112,632

 
112,646

 
112,763

 
112,662

Diluted
113,422

 
113,759

 
113,565

 
113,836

Cash dividends per common share
$
0.07

 
$
0.07

 
$
0.21

 
$
0.21

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

3


PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
 
Three Months Ended
 
Nine Months Ended
 
October 4,
2015
 
September 28,
2014
 
October 4,
2015
 
September 28,
2014
 
(In thousands)
Net income
$
54,863

 
$
42,277

 
$
144,171

 
$
126,991

Other comprehensive loss:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(46,629
)
 
(32,936
)
 
(58,055
)
 
(29,596
)
Unrealized losses on securities, net of tax
(80
)
 
(12
)
 
(143
)
 
(42
)
Other comprehensive loss
(46,709
)
 
(32,948
)
 
(58,198
)
 
(29,638
)
Comprehensive income
$
8,154

 
$
9,329

 
$
85,973

 
$
97,353











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

4


PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 
October 4,
2015
 
December 28,
2014
 
(In thousands, except share and per share data)
Current assets:
 
 
 
Cash and cash equivalents
$
195,066

 
$
174,821

Accounts receivable, net
414,193

 
470,563

Inventories
313,047

 
285,457

Other current assets
151,531

 
137,710

Total current assets
1,073,837

 
1,068,551

Property, plant and equipment:
 
 
 
At cost
494,768

 
492,814

Accumulated depreciation
(330,591
)
 
(316,620
)
Property, plant and equipment, net
164,177

 
176,194

Marketable securities and investments
1,574

 
1,568

Intangible assets, net
424,239

 
490,265

Goodwill
2,253,943

 
2,284,077

Other assets, net
113,897

 
113,420

Total assets
$
4,031,667

 
$
4,134,075

Current liabilities:
 
 
 
Current portion of long-term debt
$
1,107

 
$
1,075

Accounts payable
149,684

 
173,953

Accrued restructuring and contract termination charges
12,111

 
17,124

Accrued expenses and other current liabilities
389,274

 
403,021

Current liabilities of discontinued operations
2,100

 
2,137

Total current liabilities
554,276

 
597,310

Long-term debt
1,027,269

 
1,051,892

Long-term liabilities
395,798

 
442,771

Total liabilities
1,977,343

 
2,091,973

Commitments and contingencies (see Note 18)

 

Stockholders’ equity:
 
 
 
Preferred stock—$1 par value per share, authorized 1,000,000 shares; none issued or outstanding

 

Common stock—$1 par value per share, authorized 300,000,000 shares; issued and outstanding 111,905,000 shares and 112,481,000 shares at October 4, 2015 and at December 28, 2014, respectively
111,905

 
112,481

Capital in excess of par value
44,791

 
94,276

Retained earnings
1,931,026

 
1,810,545

Accumulated other comprehensive (loss) income
(33,398
)
 
24,800

Total stockholders’ equity
2,054,324

 
2,042,102

Total liabilities and stockholders’ equity
$
4,031,667

 
$
4,134,075

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

5


PERKINELMER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) 
 
Nine Months Ended
 
October 4,
2015
 
September 28,
2014
 
(In thousands)
Operating activities:
 
 
 
Net income
$
144,171

 
$
126,991

Loss from discontinued operations and dispositions, net of income taxes
33

 
2,861

Income from continuing operations
144,204

 
129,852

Adjustments to reconcile income from continuing operations to net cash provided by continuing operations:
 
 
 
Restructuring and contract termination charges, net
4,838

 
13,969

Depreciation and amortization
83,757

 
86,833

Stock-based compensation
12,483

 
11,769

Amortization of deferred debt financing costs and accretion of discount
1,112

 
1,071

Amortization of acquired inventory revaluation
7,275

 

Changes in operating assets and liabilities which provided (used) cash, excluding effects from companies purchased and divested:
 
 
 
Accounts receivable, net
36,361

 
26,841

Inventories
(50,824
)
 
(28,536
)
Accounts payable
(19,916
)
 
(4,009
)
Accrued expenses and other
(57,361
)
 
(52,133
)
Net cash provided by operating activities of continuing operations
161,929

 
185,657

Net cash used in operating activities of discontinued operations
(70
)
 
(624
)
Net cash provided by operating activities
161,859

 
185,033

Investing activities:
 
 
 
Capital expenditures
(17,814
)
 
(22,214
)
Proceeds from surrender of life insurance policies
757

 
490

Changes in restricted cash balances
59

 

Activity related to acquisitions and investments, net of cash and cash equivalents acquired
(18,735
)
 
(1,879
)
Net cash used in investing activities of continuing operations
(35,733
)
 
(23,603
)
Net cash used in investing activities of discontinued operations

 
(213
)
Net cash used in investing activities
(35,733
)
 
(23,816
)
Financing activities:
 
 
 
Payments on revolving credit facility
(371,000
)
 
(305,000
)
Proceeds from revolving credit facility
347,000

 
227,000

Payments of debt financing costs

 
(1,845
)
Settlement of hedges
19,210

 

Net payments on other credit facilities
(800
)
 
(1,225
)
Payments for acquisition-related contingent consideration
(26
)
 
(855
)
Proceeds from issuance of common stock under stock plans
13,081

 
20,947

Purchases of common stock
(76,158
)
 
(39,004
)
Dividends paid
(23,737
)
 
(23,713
)
Net cash used in financing activities
(92,430
)
 
(123,695
)
Effect of exchange rate changes on cash and cash equivalents
(13,451
)
 
(7,081
)
Net increase in cash and cash equivalents
20,245

 
30,441

Cash and cash equivalents at beginning of period
174,821

 
173,242

Cash and cash equivalents at end of period
$
195,066

 
$
203,683

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

6


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”), without audit, in accordance with accounting principles generally accepted in the United States of America (the “U.S.” or the "United States") and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information in the footnote disclosures of the financial statements has been condensed or omitted where it substantially duplicates information provided in the Company’s latest audited consolidated financial statements, in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in its Annual Report on Form 10-K for the fiscal year ended December 28, 2014, filed with the SEC (the “2014 Form 10-K”). The balance sheet amounts at December 28, 2014 in this report were derived from the Company’s audited 2014 consolidated financial statements included in the 2014 Form 10-K. The condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods indicated. The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and classifications of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for the three and nine months ended October 4, 2015 and September 28, 2014, respectively, are not necessarily indicative of the results for the entire fiscal year or any future period. The Company has evaluated subsequent events from October 4, 2015 through the date of the issuance of these condensed consolidated financial statements and has determined that other than the events the Company has disclosed within the footnotes to the financial statements, no material subsequent events have occurred that would affect the information presented in these condensed consolidated financial statements or would require additional disclosure.

The Company’s fiscal year ends on the Sunday nearest December 31. The Company reports fiscal years under a 52/53 week format and as a result, certain fiscal years will contain 53 weeks. The fiscal year ending January 3, 2016 ("fiscal year 2015") will include 53 weeks, while the fiscal year ended December 28, 2014 ("fiscal year 2014") included 52 weeks. The additional week in fiscal year 2015 has been reflected in the Company's third quarter, which consisted of 14 weeks as compared to the Company's third quarter of fiscal year 2014, which consisted of 13 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 condensed consolidated financial position, results of operations and cash flows or do not apply to the Company’s operations.

In September 2015, the FASB issued Accounting Standards Update No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments ("ASU No. 2015-16"). Under this new guidance, an acquirer should recognize adjustments to provisional amounts for items in a business combination that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The acquirer should record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The provisions of this guidance are to be applied prospectively and are effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted. During the third quarter of fiscal year 2015, the Company early adopted the new guidance and adjusted the provisional amounts recorded for acquisitions in which the purchase accounting allocations as of October 4, 2015 were preliminary. During the three and nine months ended October 4, 2015, there was an immaterial impact on the current period net income as a result of the change to the provisional amounts for items that would have been recognized in previous periods if the adjustments to provisional amounts had been recognized as of the acquisition date.

In July 2015, the FASB issued Accounting Standards Update No. 2015-11, Simplifying the Measurement of Inventory. Under this new guidance, companies that use inventory measurement methods other than last-in, first-out or the retail inventory method should measure inventory at the lower of cost and net realizable value. The provisions of this guidance are to be applied prospectively and are effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. The Company is evaluating the requirements of this guidance. The adoption is not expected to have a material impact on the Company’s consolidated financial position, results of operations and cash flows.


7


In April 2015, the FASB issued Accounting Standards Update No. 2015-04, Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets. Under this new guidance, an entity with a fiscal year-end that does not coincide with a calendar month-end (for example an entity that has a 52/53 week fiscal year) has the ability, as a practical expedient, to measure its defined benefit retirement obligations and related plan assets as of the month-end that is closest to its fiscal year end. The guidance should be applied prospectively. During the second quarter of fiscal year 2015, the Company early adopted the new guidance. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Interest - Imputation of Interest - Simplifying the Presentation of Debt Issuance Costs. Under this new guidance, debt issuance costs should be presented in the balance sheet as a reduction of the carrying value of the associated debt liability. The provisions of this guidance are to be applied retrospectively and are effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted. The Company is expecting to early adopt this guidance in the fourth quarter of fiscal year 2015. The adoption is not expected to have a material impact on the Company's consolidated financial position, results of operations and cash flows.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. Under this new guidance, an entity should use a five-step process to recognize revenue, depicting the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires new disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Subsequent to the issuance of the standard, the FASB decided to defer the effective date for one year to annual periods beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016. The standard may be adopted either using a full retrospective approach or a modified retrospective approach. The Company is evaluating the requirements of this guidance and has not yet determined the transition method to use or the impact of its adoption on the Company’s consolidated financial position, results of operations and cash flows.

Note 2: Business Combinations
Acquisitions in fiscal year 2015
During the first nine months of fiscal year 2015, the Company completed the acquisition of three businesses for total consideration of $19.0 million in cash. The excess of the purchase prices over the fair values of each of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired. As a result of these acquisitions, the Company recorded goodwill of $13.2 million and intangible assets of $6.1 million. The Company has reported the operations for these acquisitions within the results of the Company's Human Health and Environmental Health segments from the acquisition dates. As of October 4, 2015, the purchase accounting allocations related to these acquisitions were preliminary.

Subsequent to October 4, 2015, the Company completed the acquisition of a business for total consideration of $23.0 million, in cash, as of the closing date. The operations for this acquisition will be reported within the results of the Company's Human Health segment.
Acquisitions in fiscal year 2014
Acquisition of Perten Instruments Group AB. In December 2014, the Company acquired all of the outstanding stock of Perten Instruments Group AB ("Perten"). Perten is a provider of analytical instruments and services for quality control of food, grain, flour and feed. The Company expects this acquisition to enhance its industrial, environmental and safety business by expanding the Company's product offerings to the academic and industrial end markets. The Company paid the shareholders of Perten $269.9 million in cash for the stock of Perten. The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired, and has been allocated to goodwill, none of which is tax deductible. The Company has reported the operations for this acquisition within the results of the Company’s Environmental Health segment from the acquisition date. Identifiable definite-lived intangible assets, such as core technology, customer relationships and trade names, acquired as part of this acquisition had weighted average amortization periods of approximately 5 to 10 years. As of October 4, 2015, the purchase accounting allocations related to the Perten acquisition was preliminary.

Other acquisitions in fiscal year 2014. In addition to the Perten acquisition, the Company completed the acquisition of two businesses in fiscal year 2014 for total consideration of $17.6 million in cash and $4.3 million of assumed debt. The excess of the purchase price over the fair value of each of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired, and has been allocated to goodwill, none of which is tax deductible. The Company reported the operations for these acquisitions within the

8


results of the Human Health and Environmental Health segments from the acquisition dates. As of October 4, 2015, the purchase accounting allocations related to one of the acquisitions completed during fiscal year 2014 was finalized.

The total purchase price for the acquisitions in fiscal year 2014 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:
 
Perten
 
2014 Other
 
(Preliminary)
 
(In thousands)
Fair value of business combination:
 
 
 
Cash payments
$
269,937

 
$
17,898

Working capital and other adjustments

 
(294
)
Less: cash acquired
(16,732
)
 
(124
)
Total
$
253,205

 
$
17,480

Identifiable assets acquired and liabilities assumed:
 
 
 
Current assets
$
32,578

 
$
1,935

Property, plant and equipment
1,485

 
125

Other assets

 
364

Identifiable intangible assets:
 
 
 
Core technology
17,000

 
1,705

Trade names
8,000

 

Customer relationships
87,000

 
6,800

IPR&D

 
1,266

Goodwill
163,816

 
15,518

Deferred taxes, net
(31,652
)
 
(3,072
)
Deferred revenue

 
(589
)
Liabilities assumed
(17,422
)
 
(2,285
)
Debt assumed
(7,600
)
 
(4,287
)
Total
$
253,205

 
$
17,480

During the third quarter of fiscal year 2015, the Company obtained information to assist in determining the fair values of certain tangible and intangible assets acquired and liabilities assumed as part of its acquisitions and adjusted its purchase price allocations. Based on such information, for acquisitions completed during 2015, the Company recognized a decrease in deferred taxes of $0.5 million, with a corresponding decrease in goodwill. For the Perten acquisition, the Company recognized increases in intangible assets of $2.0 million, liabilities assumed of $1.2 million and deferred taxes of $0.2 million, which were partially offset by a decrease in other current assets of $0.2 million and a decrease in goodwill of $0.4 million. For other acquisitions completed during fiscal year 2014, the Company recognized a decrease in working capital and other adjustments of $0.5 million with a corresponding decrease in goodwill. In addition, during the third quarter of fiscal year 2015, in connection with updating the provisional purchase accounting for the Perten acquisition, the Company adjusted goodwill and intangible assets which had been preliminarily recorded in U.S. dollars to Swedish Krona. This resulted in a decrease in intangible assets and goodwill of $21.4 million and a corresponding increase in other comprehensive loss through increased foreign currency translation adjustments as a result of the change in the exchange rate between the acquisition date and June 28, 2015. Of the $21.4 million decrease, $8.2 million related to changes in the exchange rate from the acquisition date through December 28, 2014. During the three and nine months ended October 4, 2015, there was an immaterial impact on the current period net income as a result of the change to the provisional amounts for items that would have been recognized in previous periods if the adjustments to provisional amounts had been recognized as of the acquisition date.
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

9


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. With the Company's adoption of ASU No. 2015-16 in the third quarter of fiscal year 2015, these adjustments will be 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. The effects of any such adjustments may cause changes in depreciation, amortization, or other income or expense. All changes that do not qualify as adjustments made during the measurement periods are also included in current period earnings.
Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and are subject to adjustment upon finalization of the purchase price allocations. The accounting for business combinations requires estimates and judgments as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair values for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. Contingent consideration is measured at fair value at the acquisition date, based on the probability that revenue thresholds or product development milestones will be achieved during the earnout period, with changes in the fair value after the acquisition date affecting earnings to the extent it is to be settled in cash. Increases or decreases in the fair value of contingent consideration liabilities primarily result from changes in the estimated probabilities of achieving revenue thresholds or product development milestones during the earnout period.
The Company may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $2.4 million as of October 4, 2015. As of October 4, 2015, the Company had recorded contingent consideration obligations with an estimated fair value of $0.5 million. The earnout period for acquisitions with open contingency periods does not exceed three years from the respective acquisition date. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the 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 transaction costs related to acquisition activities for the three and nine months ended October 4, 2015 were $0.1 million and $0.5 million, respectively. Total transaction costs related to acquisition activities for the three and nine months ended September 28, 2014 were $0.04 million and $0.2 million, respectively. These transaction costs were expensed as incurred and recorded in selling, general and administrative expenses in the Company's condensed consolidated statements of operations.

Note 3: Discontinued Operations

As part of the Company’s continuing efforts to focus on higher growth opportunities, the Company has discontinued certain businesses. The Company has accounted for these businesses as discontinued operations and, accordingly, has presented the results of operations and related cash flows as discontinued operations for all periods presented. Any remaining assets and liabilities of these businesses have been presented separately, and are reflected within assets and liabilities from discontinued operations in the accompanying condensed consolidated balance sheets as of October 4, 2015 and December 28, 2014.
In May 2014, the Company’s management approved the shutdown of its microarray-based diagnostic testing laboratory in the United States, which had been reported within the Human Health segment. The Company determined that, with the lack of adequate reimbursement from health care payers, the microarray-based diagnostic testing laboratory in the United States would need significant investment in its operations to reduce costs in order to effectively compete in the market. The shutdown of the microarray-based diagnostic testing laboratory in the United States resulted in a $0.3 million net pre-tax loss related to the disposal of fixed assets and inventory for the nine months ended September 28, 2014.
During the first nine months of each of fiscal years 2015 and 2014, the Company settled various commitments related to the divestiture of other discontinued operations and recognized net pre-tax losses. These losses were recognized as a loss on disposition of discontinued operations.

10


Summary pre-tax operating results of the discontinued operations, which include the periods prior to disposition and a $1.0 million pre-tax restructuring charge related to workforce reductions in the microarray-based diagnostic testing laboratory in the United States during the second quarter of fiscal year 2014, were as follows:
 
Three Months Ended
 
Nine Months Ended
 
October 4,
2015
 
September 28,
2014
 
October 4,
2015
 
September 28,
2014
 
(In thousands)
Sales
$
10

 
$

 
$
93

 
$
960

Costs and expenses
2

 
1,091

 
87

 
5,165

Gain (loss) from discontinued operations before income taxes
$
8

 
$
(1,091
)
 
$
6

 
$
(4,205
)
The Company recorded tax provisions of $0.04 million and $0.01 million on discontinued operations and dispositions for the three and nine months ended October 4, 2015, respectively. The Company recorded tax benefits of $0.5 million and $1.7 million on discontinued operations and dispositions for the three and nine months ended September 28, 2014, respectively.

Note 4: Restructuring and Contract Termination Charges, Net

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

The Company implemented restructuring plans in the second quarter of fiscal year 2015 and the third quarter of fiscal year 2014 consisting of workforce reductions principally intended to realign resources to emphasize growth initiatives (the "Q2 2015 Plan" and the "Q3 2014 Plan", respectively). The Company implemented restructuring plans in the second and first quarters of fiscal year 2014 consisting of workforce reductions principally intended to focus resources on higher growth end markets (the "Q2 2014 Plan" and the "Q1 2014 Plan", respectively). Details of the plans initiated in previous years (“Previous Plans”) are discussed more fully in Note 4 to the audited consolidated financial statements in the 2014 Form 10-K. The Company also has terminated various contractual commitments in connection with certain disposal activities and has recorded charges, to the extent applicable, for the costs of terminating these contracts before the end of their terms and the costs that will continue to be incurred for the remaining terms without economic benefit to the Company.

The 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 the nine months ended October 4, 2015 and fiscal year 2014:
 
 
 
Initial Restructuring or Contract Termination Charges
 
Total
 
Date or Expected Date Payments Substantially Completed by
 
Headcount Reduction
 
Human Health
 
Environmental Health
 
 
 
(In thousands, except headcount data)
 
 
Q2 2015 Plan
97

 
$
1,850

 
$
4,160

 
$
6,010

 
Q2 FY2016
2015 Contract Termination Charges

 

 
25

 
25

 
Q4 FY2015
 
 
 
 
 
 
 
 
 
 
Q3 2014 Plan
152

 
7,126

 
5,925

 
13,051

 
Q4 FY2015
Q2 2014 Plan
22

 
545

 
190

 
735

 
Q2 FY2015
Q1 2014 Plan
17

 
370

 
197

 
567

 
Q4 FY2014
2014 Contract Termination Charges

 

 
1,545

 
1,545

 
Q4 FY2015
The Company expects to make payments under the Previous Plans for remaining residual lease obligations, with terms varying in length, through fiscal year 2022.


11


At October 4, 2015, the Company had $17.1 million recorded for accrued restructuring and contract termination charges, of which $12.1 million was recorded in short-term accrued restructuring and contract termination charges and $5.0 million was recorded in long-term liabilities. At December 28, 2014, the Company had $23.8 million recorded for accrued restructuring and contract termination charges, of which $17.1 million was recorded in short-accrued restructuring and $6.7 million was recorded in long-term liabilities. The following table summarizes the Company's restructuring and contract termination accrual balances and related activity by restructuring plan, as well as contract termination, during the nine months ended October 4, 2015:
 
Balance at December 28, 2014
 
2015 Charges
 
2015 Changes in Estimates, Net
 
2015 Amounts Paid
 
Balance at October 4, 2015
 
(In thousands)
Severance:
Q2 2015 Plan(1)
$

 
$
6,010

 
$
(540
)
 
$
(3,166
)
 
$
2,304

Q3 2014 Plan
10,059

 

 

 
(5,257
)
 
4,802

Q2 2014 Plan(2)
251

 

 
(179
)
 
(8
)
 
64

Q1 2014 Plan(3)
92

 

 
(92
)
 

 

Previous Plans(4)
13,124

 

 
(386
)
 
(2,961
)
 
9,777

Restructuring
23,526

 
6,010

 
(1,197
)
 
(11,392
)
 
16,947

Contract Termination
304

 
25

 

 
(200
)
 
129

Total Restructuring and Contract Termination
$
23,830

 
$
6,035

 
$
(1,197
)
 
$
(11,592
)
 
$
17,076


(1) 
During the nine months ended October 4, 2015, the Company recognized pre-tax restructuring reversals of $0.2 million in the Human Health segment and $0.3 million in the Environmental Health segment related to lower than expected costs associated with workforce reductions for the Q2 2015 Plan.
(2) 
During the nine months ended October 4, 2015, the Company recognized pre-tax restructuring reversals of $0.1 million in each of the Human Health and Environmental Health segments related to lower than expected costs associated with workforce reductions for the Q2 2014 Plan.
(3) 
During the nine months ended October 4, 2015, the Company recognized a pre-tax restructuring reversal of $0.1 million in the Human Health segment related to lower than expected costs associated with workforce reductions for the Q1 2014 Plan.
(4) 
During the nine months ended October 4, 2015, the Company recognized a net additional pre-tax restructuring charge of $0.6 million in the Human Health segment primarily related to higher than expected costs associated with the closure of the excess facility space and a pre-tax restructuring reversal of $1.0 million in the Environmental Health segment related to lower than expected costs associated with workforce reductions for the Previous Plans.

Note 5: Interest and Other Expense, Net

Interest and other expense, net, consisted of the following:
 
Three Months Ended
 
Nine Months Ended
 
October 4,
2015
 
September 28,
2014
 
October 4,
2015
 
September 28,
2014
 
(In thousands)
Interest income
$
(147
)
 
$
(130
)
 
$
(488
)
 
$
(375
)
Interest expense
9,874

 
8,909

 
28,564

 
27,207

Other expense, net
2,217

 
2,187

 
4,132

 
4,387

Total interest and other expense, net
$
11,944

 
$
10,966

 
$
32,208

 
$
31,219



12


Note 6: Inventories

Inventories as of October 4, 2015 and December 28, 2014 consisted of the following:
 
October 4,
2015
 
December 28,
2014
 
(In thousands)
Raw materials
$
104,743

 
$
96,169

Work in progress
22,088

 
18,783

Finished goods
186,216

 
170,505

Total inventories
$
313,047

 
$
285,457


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.
At October 4, 2015, the Company had gross tax effected unrecognized tax benefits of $29.9 million, of which $26.1 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 $4.1 million of its uncertain tax positions at October 4, 2015, including accrued interest and penalties, and net of tax benefits, may be resolved over the next twelve months as a result of lapses in applicable statutes of limitations and potential settlements. Various tax years after 2007 remain open to examination by certain jurisdictions in which the Company has significant business operations, such as China, Finland, Germany, Italy, Netherlands, Singapore, the United Kingdom and the United States. The tax years under examination vary by jurisdiction.
During the first nine months of fiscal years 2015 and 2014, the Company recorded net discrete income tax benefits of $5.2 million and $5.8 million, respectively, primarily for reversals of uncertain tax position reserves and resolution of other tax matters.

Note 8: Debt

Senior Unsecured Revolving Credit Facility. On January 8, 2014, the Company refinanced its debt held under a previous senior unsecured revolving credit facility and entered into a new senior unsecured revolving credit facility. The Company's senior unsecured revolving credit facility provides for $700.0 million of revolving loans and has an initial maturity of January 8, 2019. As of October 4, 2015, undrawn letters of credit in the aggregate amount of $11.5 million were treated as issued and outstanding under the senior unsecured revolving credit facility. As of October 4, 2015, the Company had $196.5 million available for additional borrowing under the facility. The Company uses 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 under the senior unsecured revolving credit facility are based on the Eurocurrency rate or the base rate at the time of borrowing, plus a margin. The base rate is the higher of (i) the rate of interest in effect for such day as publicly announced from time to time by JP Morgan Chase Bank, N.A. as its "prime rate," (ii) the Federal Funds rate plus 50 basis points or (iii) one-month Libor plus 1.00%. At October 4, 2015, borrowings under the senior unsecured revolving credit facility were accruing interest primarily based on the Eurocurrency rate. The Eurocurrency margin as of October 4, 2015 was 108 basis points. The weighted average Eurocurrency interest rate as of October 4, 2015 was 0.25%, resulting in a weighted average effective Eurocurrency rate, including the margin, of 1.33%. At October 4, 2015 and December 28, 2014, the Company had $492.0 million and $516.0 million, respectively, of borrowings in U.S. dollars outstanding under the senior unsecured revolving credit facility. The credit agreement for the facility contains affirmative, negative and financial covenants and events of default similar to those contained in the credit agreement for the Company's previous facility. The financial covenants in the Company's senior unsecured revolving credit facility include a debt-to-capital ratio, and two contingent covenants, a maximum consolidated leverage ratio and a minimum consolidated interest coverage ratio, applicable if the Company's credit rating is downgraded below investment grade.
5% Senior Unsecured Notes due in 2021. On October 25, 2011, the Company issued $500.0 million aggregate principal amount of senior unsecured notes due in 2021 (the “2021 Notes”) in a registered public offering and received $496.9 million of

13


net proceeds from the issuance. The 2021 Notes were issued at 99.372% of the principal amount, which resulted in a discount of $3.1 million. As of October 4, 2015, the 2021 Notes had an aggregate carrying value of $497.9 million, net of $2.1 million of unamortized original issue discount. As of December 28, 2014, the 2021 Notes had an aggregate carrying value of $497.7 million, net of $2.3 million of unamortized original issue discount. The 2021 Notes mature in November 2021 and bear interest at an annual rate of 5%. Interest on the 2021 Notes is payable semi-annually on May 15th and November 15th each year. Prior to August 15, 2021 (three months prior to their maturity date), the Company may redeem the 2021 Notes in whole or in part, at its option, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2021 Notes to be redeemed, plus accrued and unpaid interest, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest in respect to the 2021 Notes being redeemed, discounted on a semi-annual basis, at the Treasury Rate plus 45 basis points, plus accrued and unpaid interest. At any time on or after August 15, 2021 (three months prior to their maturity date), the Company may redeem the 2021 Notes, at its option, at a redemption price equal to 100% of the principal amount of the 2021 Notes to be redeemed plus accrued and unpaid interest. Upon a change of control (as defined in the indenture governing the 2021 Notes) and a contemporaneous downgrade of the 2021 Notes below investment grade, each holder of 2021 Notes will have the right to require the Company to repurchase such holder's 2021 Notes for 101% of their principal amount, plus accrued and unpaid interest.
Financing Lease Obligations. In fiscal year 2012, the Company entered into agreements with the lessors of certain buildings that the Company is currently occupying and leasing to expand those buildings. The Company provided a portion of the funds needed for the construction of the additions to the buildings, and as a result the Company was considered the owner of the buildings during the construction period. At the end of the construction period, the Company was not reimbursed by the lessors for all of the construction costs. The Company is therefore deemed to have continuing involvement and the leases qualify as financing leases under sale-leaseback accounting guidance, representing debt obligations for the Company and non-cash investing and financing activities. As a result, the Company capitalized $29.3 million in property and equipment, net, representing the fair value of the buildings with a corresponding increase to debt. The Company has also capitalized $11.5 million in additional construction costs necessary to complete the renovations to the buildings, which were funded by the lessors, with a corresponding increase to debt. At October 4, 2015, the Company had $38.5 million recorded for these financing lease obligations, of which $1.1 million was recorded as short-term debt and $37.4 million was recorded as long-term debt. At December 28, 2014, the Company had $39.3 million recorded for these financing lease obligations, of which $1.1 million was recorded as short-term debt and $38.2 million was recorded as long-term debt. The buildings are being depreciated on a straight-line basis over the terms of the leases to their estimated residual values, which will equal the remaining financing obligation at the end of the lease term. At the end of the lease term, the remaining balances in property, plant and equipment, net and debt will be reversed against each other.

Note 9: Earnings Per Share

Basic earnings per share was computed by dividing net income by the weighted-average number of common shares outstanding during the period less restricted unvested shares. Diluted earnings per share was computed by dividing net income by the weighted-average number of common shares outstanding plus all potentially dilutive common stock equivalents, primarily shares issuable upon the exercise of stock options using the treasury stock method. The following table reconciles the number of shares utilized in the earnings per share calculations:
 
Three Months Ended
 
Nine Months Ended
 
October 4,
2015
 
September 28,
2014
 
October 4,
2015
 
September 28,
2014
 
(In thousands)
Number of common shares—basic
112,632

 
112,646

 
112,763

 
112,662

Effect of dilutive securities:
 
 
 
 
 
 
 
Stock options
580

 
870

 
633

 
964

Restricted stock awards
210

 
243

 
169

 
210

Number of common shares—diluted
113,422

 
113,759

 
113,565

 
113,836

Number of potentially dilutive securities excluded from calculation due to antidilutive impact
521

 
482

 
649

 
480

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.


14


Note 10: 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 Company’s management reviews the results of the Company’s operations by the Human Health and Environmental Health operating segments. The accounting policies of the operating segments are the same as those described in Note 1 to the audited consolidated financial statements in the 2014 Form 10-K.

The Company realigned its organization at the beginning of fiscal year 2015 to enable the Company to both deliver complete solutions targeted towards certain end markets and develop value-added applications and solutions to foster further expansion of those markets. OneSource, the multivendor service offering business that serves the life sciences end market, was moved from the Environmental Health segment into the Human Health segment. The results reported for the three and nine months ended October 4, 2015 reflect this new alignment of the Company's operating segments. Financial information in this report relating to the three and nine months ended September 28, 2014 and the fiscal year ended 2014 have been retrospectively adjusted to reflect the changes to the operating segments. The principal products and services of the Company's two operating segments are:
Human Health.    Develops diagnostics, tools and applications to help detect diseases earlier and more accurately and to accelerate the discovery and development of critical new therapies. The Human Health segment serves both the diagnostics and research markets.
Environmental Health.    Provides products, services and solutions to facilitate the creation of safer food and consumer products, more secure surroundings and efficient energy resources. The Environmental Health segment serves the environmental, industrial and laboratory services markets.
The Company has included the expenses for its corporate headquarters, such as legal, tax, audit, human resources, information technology, and other management and compliance costs, as well as the activity related to the mark-to-market adjustment on postretirement benefit plans, as “Corporate” below. The Company has a process to allocate and recharge expenses to the reportable segments when these costs are administered or paid by the corporate headquarters based on the extent to which the segment benefited from the expenses. These amounts have been calculated in a consistent manner and are included in the Company’s calculations of segment results to internally plan and assess the performance of each segment for all purposes, including determining the compensation of the business leaders for each of the Company’s operating segments.

15


Revenue and operating income (loss) from continuing operations by operating segment are shown in the table below: 
 
Three Months Ended
 
Nine Months Ended
 
October 4,
2015
 
September 28,
2014
 
October 4,
2015
 
September 28,
2014
 
(In thousands)
Human Health
 
 
 
 
 
 
 
Product revenue
$
238,553

 
$
237,312

 
$
712,207

 
$
721,449

Service revenue
105,083

 
99,637

 
298,970

 
288,076

Total revenue
343,636

 
336,949

 
1,011,177

 
1,009,525

Operating income from continuing operations
63,147

 
48,089

 
179,560

 
149,979

Environmental Health
 
 
 
 
 
 
 
Product revenue
139,772

 
128,621

 
414,149

 
391,578

Service revenue
80,028

 
76,479

 
228,917

 
227,726

Total revenue
219,800

 
205,100

 
643,066

 
619,304

Operating income from continuing operations
22,838

 
18,540

 
53,606

 
65,725

Corporate
 
 
 
 
 
 
 
Operating loss from continuing operations(1)
(10,087
)
 
(7,853
)
 
(31,756
)
 
(35,529
)
Continuing Operations
 
 
 
 
 
 
 
Product revenue
378,325

 
365,933

 
1,126,356

 
1,113,027

Service revenue
185,111

 
176,116

 
527,887

 
515,802

Total revenue
563,436

 
542,049

 
1,654,243

 
1,628,829

Operating income from continuing operations
75,898

 
58,776

 
201,410

 
180,175

Interest and other expense, net (see Note 5)
11,944

 
10,966

 
32,208

 
31,219

Income from continuing operations before income taxes
$
63,954

 
$
47,810

 
$
169,202

 
$
148,956

____________________________
(1) 
In 2002, Enzo Biochem, Inc. and Enzo Life Sciences, Inc. (collectively, “Enzo”) filed a complaint that alleged that the Company separately and together with other defendants breached distributorship and settlement agreements with Enzo, infringed Enzo's patents, engaged in unfair competition and fraud, and committed torts against Enzo by, among other things, engaging in commercial development and exploitation of Enzo's patented products and technology. The Company entered into a settlement agreement with Enzo dated June 20, 2014 and during fiscal year 2014 paid $7.0 million into a designated escrow account to resolve this matter, of which $3.7 million had been accrued in previous years and $3.3 million was recorded in the second quarter of fiscal year 2014. In addition, the Company incurred $3.4 million of expenses in preparation for the trial during the six months ended June 29, 2014.

Note 11: Stockholders’ Equity
Comprehensive Income:
The components of accumulated other comprehensive (loss) income consisted of the following:
 
October 4,
2015
 
December 28,
2014
 
(In thousands)
Foreign currency translation adjustments
$
(34,723
)
 
$
23,332

Unrecognized prior service costs, net of income taxes
1,575

 
1,575

Unrealized net losses on securities, net of income taxes
(250
)
 
(107
)
Accumulated other comprehensive (loss) income
$
(33,398
)
 
$
24,800


Stock Repurchases:
On October 23, 2014, the Board of Directors (the "Board") authorized the Company to repurchase up to 8.0 million shares of common stock under a stock repurchase program (the "Repurchase Program"). The Repurchase Program will expire on October 23, 2016 unless terminated earlier by the Board, and may be suspended or discontinued at any time. During the nine months ended October 4, 2015, the Company repurchased 1.5 million shares of common stock in the open market at an

16


aggregate cost of $72.0 million, including commissions, under the Repurchase Program. As of October 4, 2015, 5.9 million shares remained available for repurchase 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 nine months ended October 4, 2015, the Company repurchased 89,558 shares of common stock for this purpose at an aggregate cost of $4.2 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 for each of the first three quarters of fiscal year 2015 and in each quarter of fiscal year 2014. At October 4, 2015, the Company has accrued $7.8 million for dividends declared on July 22, 2015 for the third quarter of fiscal year 2015, payable in November 2015. On October 29, 2015, the Company announced that the Board had declared a quarterly dividend of $0.07 per share for the fourth quarter of fiscal year 2015 that will be payable in February 2016. 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 12: Stock Plans

In addition to the Company's Employee Stock Purchase Plan, the Company utilizes one stock-based compensation plan, the 2009 Incentive Plan (the “2009 Plan”). Under the 2009 Plan, 10.0 million shares of the Company's common stock are authorized for stock option grants, restricted stock awards, performance units and stock grants as part of the Company’s compensation programs. In addition to shares of the Company’s common stock originally authorized for issuance under the 2009 Plan, the 2009 Plan includes shares of the Company’s common stock previously granted under the Amended and Restated 2001 Incentive Plan and the 2005 Incentive Plan that were canceled or forfeited without the shares being issued.
The following table summarizes total pre-tax compensation expense recognized related to the Company’s stock options, restricted stock, restricted stock units, performance units and stock grants, net of estimated forfeitures, included in the Company’s condensed consolidated statements of operations for the three and nine months ended October 4, 2015 and September 28, 2014:
 
Three Months Ended
 
Nine Months Ended
 
October 4,
2015
 
September 28,
2014
 
October 4,
2015
 
September 28,
2014
 
(In thousands)
Cost of product and service revenue
$
323

 
$
386

 
$
964

 
$
1,056

Research and development expenses
119

 
39

 
419

 
400

Selling, general and administrative expenses
3,848

 
2,025

 
11,100

 
10,313

Total stock-based compensation expense
$
4,290

 
$
2,450

 
$
12,483

 
$
11,769

The total income tax benefit recognized in the condensed consolidated statements of operations for stock-based compensation was $1.4 million and $4.1 million for the three and nine months ended October 4, 2015, respectively. The total income tax benefit recognized in the condensed consolidated statements of operations for stock-based compensation was $0.8 million and $4.2 million for the three and nine months ended September 28, 2014, respectively. Stock-based compensation costs capitalized as part of inventory were $0.4 million as of both October 4, 2015 and September 28, 2014.
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 Nine Months Ended
 
October 4,
2015
 
September 28,
2014
Risk-free interest rate
1.3
%
 
1.5
%
Expected dividend yield
0.6
%
 
0.7
%
Expected term
5 years

 
5 years

Expected stock volatility
26.5
%
 
30.9
%

17


The following table summarizes stock option activity for the nine months ended October 4, 2015:
 
Number
of
Shares
 
Weighted-
Average Exercise
Price
 
Weighted-Average
Remaining
Contractual Term
 
Total
Intrinsic
Value
 
(In thousands)
 
 
 
(In years)
 
(In millions)
Outstanding at December 28, 2014
2,828

 
$
26.11

 
 
 
 
Granted
490

 
46.25

 
 
 
 
Exercised
(751
)
 
17.42

 
 
 
 
Canceled
(3
)
 
22.49

 
 
 
 
Forfeited
(83
)
 
31.43

 
 
 
 
Outstanding at October 4, 2015
2,481

 
$
32.54

 
3.8
 
$
42.4

Exercisable at October 4, 2015
1,599

 
$
26.48

 
2.7
 
$
37.0

Vested and expected to vest in the future
2,413

 
$
32.28

 
3.7
 
$
41.9

The weighted-average per-share grant-date fair value of options granted during the three and nine months ended October 4, 2015 was $11.44 and $11.00, respectively. The weighted-average per-share grant-date fair value of options granted during the three and nine months ended September 28, 2014 was $12.78 and $11.86, respectively. The total intrinsic value of options exercised during the three and nine months ended October 4, 2015 was $0.7 million and $22.6 million, respectively. The total intrinsic value of options exercised during the three and nine months ended September 28, 2014 was $1.9 million and $19.6 million, respectively. Cash received from option exercises for the nine months ended October 4, 2015 and September 28, 2014 was $13.1 million and $20.9 million, respectively.
The total compensation expense recognized related to the Company’s outstanding options was $1.2 million and $3.2 million for the three and nine months ended October 4, 2015, respectively, and $1.0 million and $3.9 million for the three and nine months ended September 28, 2014, respectively.
There was $6.8 million of total unrecognized compensation cost related to nonvested stock options granted as of October 4, 2015. This cost is expected to be recognized over a weighted-average period of 1.9 years.
Restricted Stock Awards: The following table summarizes restricted stock award activity for the nine months ended October 4, 2015:
 
Number of
Shares
 
Weighted-
Average
Grant-
Date Fair
Value
 
(In thousands)
 
 
Nonvested at December 28, 2014
558

 
$
35.51

Granted
224

 
46.63

Vested
(232
)
 
30.55

Forfeited
(30
)
 
40.38

Nonvested at October 4, 2015
520

 
$
42.23

The weighted-average per-share grant-date fair value of restricted stock awards granted during the three and nine months ended October 4, 2015 was $48.77 and $46.63, respectively. The weighted-average per-share grant-date fair value of restricted stock awards granted during the three and nine months ended September 28, 2014 was $45.42 and $42.69, respectively. The fair value of restricted stock awards vested during the three and nine months ended October 4, 2015 was $0.2 million and $7.1 million, respectively. The fair value of restricted stock awards vested during the three and nine months ended September 28, 2014 was $0.1 million and $7.1 million, respectively. The total compensation expense recognized related to the Company’s outstanding restricted stock awards was $2.2 million and $6.5 million for the three and nine months ended October 4, 2015, respectively, and $1.6 million and $5.5 million for the three and nine months ended September 28, 2014, respectively.
As of October 4, 2015, there was $12.7 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 1.5 years.

18


Performance Units: The Company granted 66,509 and 79,463 performance units during the nine months ended October 4, 2015 and September 28, 2014, respectively, as part of the Company’s executive incentive program. The weighted-average per-share grant-date fair value of performance units granted during the nine months ended October 4, 2015 and September 28, 2014 was $46.83 and $42.84, respectively. During the nine months ended October 4, 2015 and September 28, 2014, 8,860 and 19,667 performance units were forfeited, respectively. The total compensation expense recognized related to performance units was $0.8 million and $2.1 million for the three and nine months ended October 4, 2015, respectively, and a reversal of an expense of $0.2 million and an expense of $1.6 million for the three and nine months ended September 28, 2014, respectively. As of October 4, 2015, there were 201,415 performance units outstanding and subject to forfeiture, with a corresponding liability of $4.0 million recorded in accrued expenses and other current liabilities.
Stock Awards: The Company generally grants stock awards only to non-employee members of the Board. The Company granted 1,953 shares and 2,373 shares to each non-employee member of the Board during the nine months ended October 4, 2015 and September 28, 2014, respectively. The Company also granted 544 shares to a new non-employee member of the Board during the three months ended March 29, 2015. The weighted-average per-share grant-date fair value of the stock awards granted during the nine months ended October 4, 2015 and September 28, 2014 was $51.01 and $42.14, respectively. The total compensation expense recognized related to these stock awards was $0.7 million for each of the nine months ended October 4, 2015 and September 28, 2014.
Employee Stock Purchase Plan: During the nine months ended October 4, 2015, the Company issued 54,374 shares of common stock under the Company's Employee Stock Purchase Plan at a weighted-average price of $45.41 per share. During the nine months ended September 28, 2014, the Company issued 60,870 shares of common stock under the Company's Employee Stock Purchase Plan at a weighted-average price of $41.71 per share. At October 4, 2015, an aggregate of 1.0 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.

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 a two-step process. The first step is the comparison of the fair value to the carrying value of the reporting unit to determine if the carrying value exceeds the fair value. The second step measures the amount of an impairment loss, and is only performed if the carrying value exceeds the fair value of the reporting unit. The Company performed its annual impairment testing for its reporting units as of January 1, 2015, its annual impairment date for fiscal year 2015. 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 20.0% for each reporting unit. The long-term terminal growth rates for the Company’s reporting units ranged from 4.0% to 6.5% for the fiscal year 2015 impairment analysis. The range for the discount rates for the reporting units was 9.5% to 12.5%. Keeping all other variables constant, a 10.0% change in any one of the input assumptions for the various reporting units would still allow the Company to conclude, based on the first step of the process, that there was no impairment of goodwill.
Subsequent to the 2015 annual impairment test, the Company realigned its organization, as discussed in Note 10. While the realignment did not have a significant impact on the fair values of the reporting units as discussed above, the realignment did result in a change in the composition of the Company's reportable segments. OneSource, the multivendor service offering business that serves the life sciences end market, was moved from the Environmental Health segment into the Human Health segment. As a result of the new alignment, the Company reallocated goodwill from the Environmental Health segment to the Human Health segment based on the relative fair value, determined using the income approach, of the business. During the second quarter of 2015, the Company updated its preliminary analysis and the realignment resulted in $41.2 million of goodwill being reallocated from the Environmental Health segment into the Human Health segment as of December 28, 2014.
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

19


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.
The Company has consistently employed the relief from royalty model to estimate the current fair value when testing for impairment of non-amortizing intangible assets. The impairment test consists of a comparison of the fair value of the non-amortizing intangible asset with its carrying amount. If the carrying amount of a non-amortizing intangible asset exceeds its fair value, an impairment loss in an amount equal to that excess is recognized. In addition, the Company evaluates the remaining useful lives of its non-amortizing intangible assets at least annually to determine whether events or circumstances continue to support an indefinite useful life. If events or circumstances indicate that the useful lives of non-amortizing intangible assets are no longer indefinite, the assets will be tested for impairment. These intangible assets will then be amortized prospectively over their estimated remaining useful lives and accounted for in the same manner as other intangible assets that are subject to amortization. The Company performed its annual impairment testing as of January 1, 2015, and concluded that there was no impairment of non-amortizing intangible assets. 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 nine months of fiscal year 2015.
The changes in the carrying amount of goodwill for the period ended October 4, 2015 from December 28, 2014 were as follows:
 
Human
Health
 
Environmental
Health
 
Consolidated
 
(In thousands)
Balance at December 28, 2014
$
1,662,755

 
$
621,322

 
$
2,284,077

Foreign currency translation
(19,018
)
 
(23,557
)
 
(42,575
)
Acquisitions and other
33

 
12,408

 
12,441

Balance at October 4, 2015
$
1,643,770

 
$
610,173

 
$
2,253,943

Identifiable intangible asset balances at October 4, 2015 and December 28, 2014 by category were as follows:
 
October 4,
2015
 
December 28,
2014
 
(In thousands)
Patents
$
39,923

 
$
39,953

Less: Accumulated amortization
(29,141
)
 
(27,200
)
Net patents
10,782

 
12,753

Trade names and trademarks
40,381

 
40,069

Less: Accumulated amortization
(19,768
)
 
(16,936
)
Net trade names and trademarks
20,613

 
23,133

Licenses
59,058

 
59,631

Less: Accumulated amortization
(44,386
)
 
(41,792
)
Net licenses
14,672

 
17,839

Core technology
295,694

 
298,491

Less: Accumulated amortization
(204,499
)
 
(184,697
)
Net core technology
91,195

 
113,794

Customer relationships
393,240

 
402,185

Less: Accumulated amortization
(182,535
)
 
(156,994
)
Net customer relationships
210,705

 
245,191

IPR&D
9,572

 
10,103

Less: Accumulated amortization
(3,884
)
 
(3,132
)
Net IPR&D
5,688

 
6,971

Net amortizable intangible assets
353,655

 
419,681

Non-amortizing intangible assets:
 
 
 
Trade names and trademarks
70,584

 
70,584

Total
$
424,239

 
$
490,265


20


Total amortization expense related to definite-lived intangible assets was $18.8 million and $58.5 million for the three and nine months ended October 4, 2015, respectively, and $20.6 million and $61.9 million for the three and nine months September 28, 2014, respectively. Estimated amortization expense related to definite-lived intangible assets for each of the next five years is $21.5 million for the remainder of fiscal year 2015, $70.9 million for fiscal year 2016, $61.1 million for fiscal year 2017, $50.1 million for fiscal year 2018, and $38.3 million for fiscal year 2019.

Note 14: 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 condensed consolidated balance sheets.
A summary of warranty reserve activity for the three and nine months ended October 4, 2015 and September 28, 2014 is as follows:
 
Three Months Ended
 
Nine Months Ended
 
October 4,
2015
 
September 28,
2014
 
October 4,
2015
 
September 28,
2014
 
(In thousands)
Balance at beginning of period
$
10,810

 
$
10,786

 
$
10,783

 
$
10,534

Provision charged to income
4,240

 
4,187

 
12,728

 
12,596

Payments
(4,412
)
 
(4,154
)
 
(12,158
)
 
(12,509
)
Adjustments to previously provided warranties, net
129

 
(130
)
 
(342
)
 
44

Foreign currency translation and acquisitions
(155
)
 
(293
)
 
(399
)
 
(269
)
Balance at end of period
$
10,612

 
$
10,396

 
$
10,612

 
$
10,396


Note 15: Employee Postretirement Benefit Plans

The following table summarizes the components of net periodic benefit (credit) cost for the Company’s various defined benefit employee pension and postretirement plans for the three and nine months ended October 4, 2015 and September 28, 2014:
 
Defined Benefit
Pension Benefits
 
Postretirement
Medical Benefits
 
Three Months Ended
 
October 4,
2015
 
September 28,
2014
 
October 4,
2015
 
September 28,
2014
 
(In thousands)
Service cost
$
1,083

 
$
1,030

 
$
27

 
$
24

Interest cost
5,176

 
5,914

 
36

 
39

Expected return on plan assets
(6,513
)
 
(6,277
)
 
(265
)
 
(241
)
Amortization of prior service costs
(59
)
 
(72
)
 

 

Net periodic benefit (credit) cost
$
(313
)
 
$
595

 
$
(202
)
 
$
(178
)

21


 
Defined Benefit
Pension Benefits
 
Postretirement
Medical Benefits
 
Nine Months Ended
 
October 4,
2015
 
September 28,
2014
 
October 4,
2015
 
September 28,
2014
 
(In thousands)
Service cost
$
3,274

 
$
3,094

 
$
81

 
$
72

Interest cost
15,602

 
17,761

 
108

 
116

Expected return on plan assets
(19,535
)
 
(18,820
)
 
(797
)
 
(723
)
Curtailment gain
(816
)
 

 

 

Actuarial loss
821

 

 

 

Amortization of prior service
(182
)
 
(214
)
 

 

Net periodic benefit (credit) cost
$
(836
)
 
$
1,821

 
$
(608
)
 
$
(535
)
During the nine months ended October 4, 2015 and September 28, 2014, the Company contributed $6.5 million and $2.8 million, respectively, in the aggregate, to pension plans outside of the United States. During the nine months ended October 4, 2015, the Company contributed $20.0 million to its defined benefit pension plan in the United States.
In the third quarter of fiscal year 2014, the Company notified certain employees of its intention to terminate their employment as part of the Q3 2014 restructuring plan. During the second quarter of fiscal year 2015, the termination of these participants decreased the expected future service lives in excess of the curtailment limit for one of the Company's pension plans, which resulted in a curtailment gain. The Company recorded the curtailment gain of $0.8 million during the second quarter of fiscal year 2015. As part of the curtailment, the Company remeasured the assets and liabilities of the plan that had the curtailment based upon current discount rates and the fair value of the pension plan's assets as of the curtailment date, which resulted in an actuarial loss of $0.8 million.
The Company recognizes actuarial gains and losses, unless an interim remeasurement is required, in operating results 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 2014 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.

Note 16: Derivatives and Hedging Activities

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

In the ordinary course of business, the Company enters into foreign exchange contracts for periods consistent with its committed exposures to mitigate the effect of foreign currency movements on transactions denominated in foreign currencies. Transactions covered by hedge contracts include intercompany and third-party receivables and payables. The contracts are primarily in European and Asian currencies, have maturities that do not exceed 12 months, have no cash requirements until maturity, and are recorded at fair value on the Company’s condensed consolidated balance sheets. The unrealized gains and losses on the Company’s foreign currency contracts are recognized immediately in earnings, included 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 British Pound, Euro, Japanese Yen and Singapore Dollar. The Company held forward foreign exchange contracts, designated as economic hedges, with U.S. dollar equivalent notional amounts totaling $104.7 million, $95.0 million and $127.2 million at October 4, 2015, December 28, 2014 and September 28, 2014, respectively, and the fair value of these foreign currency derivative contracts was insignificant. The gains and losses realized on these

22


foreign currency derivative contracts are not material. The duration of these contracts was generally 30 days or less during each of the nine months ended October 4, 2015 and September 28, 2014.

In addition, in connection with certain intercompany loan agreements 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 earnings, included 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.

During the nine months ended October 4, 2015, the Company settled several of these forward exchange contracts and entered into additional new contracts that will settle in fiscal year 2015. The combined Euro denominated notional amounts of these outstanding hedges was €108.7 million and €238.2 million as of October 4, 2015 and December 28, 2014, respectively. 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 the nine months ending October 4, 2015. The Company received $19.2 million as a result of the settlement of these hedges in the nine months ended October 4, 2015.

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

Note 17: 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 October 4, 2015.
The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during the nine months ended October 4, 2015. 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 October 4, 2015 and December 28, 2014 classified in one of the three classifications described above:
 
 
 
Fair Value Measurements at October 4, 2015 Using:
 
Total Carrying Value at October 4, 2015
 
Quoted Prices in
Active Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
(In thousands)
Marketable securities
$
1,574

 
$
1,574

 
$

 
$

Foreign exchange derivative assets
50

 

 
50

 

Foreign exchange derivative liabilities
(2,295
)
 

 
(2,295
)
 

Contingent consideration
(519
)
 

 

 
(519
)
 

23


 
 
 
Fair Value Measurements at December 28, 2014 Using:
 
Total Carrying Value at December 28, 2014
 
Quoted Prices in
Active Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable 
Inputs
(Level 3)
 
(In thousands)
Marketable securities
$
1,568

 
$
1,568

 
$

 
$

Foreign exchange derivative assets
3,205

 

 
3,205

 

Foreign exchange derivative liabilities
(302
)
 

 
(302
)
 

Contingent consideration
(91
)
 

 

 
(91
)
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 October 4, 2015 and December 28, 2014, none of the master netting arrangements involved collateral.
Level 3 Valuation Techniques:    The Company’s Level 3 liabilities are comprised of contingent consideration related to acquisitions. For liabilities that utilize Level 3 inputs, the Company uses significant unobservable inputs. Below is a summary of valuation techniques for Level 3 liabilities.
Contingent consideration:    The Company has classified its net liabilities for contingent consideration relating to its acquisitions within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs, which included probability weighted cash flows. A description of the significant acquisitions is included within Note 2 to the Company's audited consolidated financial statements filed with the 2014 Form 10-K. Contingent consideration is measured at fair value at the acquisition date, based on the probability that revenue thresholds or product development milestones will be achieved during the earnout period. Increases or decreases in the fair value of contingent consideration liabilities primarily result from changes in the estimated probabilities of achieving revenue thresholds or product development milestones during the earnout period. The Company may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $2.4 million as of October 4, 2015. As of October 4, 2015, the Company had recorded contingent consideration obligations with an estimated fair value of $0.5 million. The earnout period for acquisitions with open contingency periods does not exceed three years from the respective acquisition date, and the remaining weighted average earnout period at October 4, 2015 was 1 year.
A reconciliation of the beginning and ending Level 3 net liabilities for contingent consideration is as follows:
 
Three Months Ended
 
Nine Months Ended
 
October 4,
2015
 
September 28,
2014
 
October 4,
2015
 
September 28,
2014
 
(In thousands)
Balance at beginning of period
$
(475
)
 
$
(3,430
)
 
$
(91
)
 
$
(4,926
)
Additions

 

 
(475
)
 

Amounts paid and foreign currency translation
26

 
2,137

 
36

 
2,065

Change in fair value (included within selling, general and administrative expenses)
(70
)
 
7

 
11

 
1,575

Balance at end of period
$
(519
)
 
$
(1,286
)
 
$
(519
)
 
$
(1,286
)

24


The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturities of these assets and liabilities. If measured at fair value, cash and cash equivalents would be classified as Level 1.
The Company’s senior unsecured revolving credit facility, which provides for $700.0 million of revolving loans, had amounts outstanding, excluding letters of credit, of $492.0 million and $516.0 million as of October 4, 2015 and December 28, 2014, respectively. 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 the first nine months of fiscal year 2015. Consequently, the carrying value of the current year and prior year credit facilities approximate fair value and would be classified as Level 2.
The Company's 2021 Notes, with a face value of $500.0 million, had an aggregate carrying value of $497.9 million, net of $2.1 million of unamortized original issue discount, and a fair value of $528.1 million as of October 4, 2015. The 2021 Notes had an aggregate carrying value of $497.7 million, net of $2.3 million of unamortized original issue discount, and a fair value of $542.7 million as of December 28, 2014. The fair value of the 2021 Notes is estimated using market quotes from brokers and is based on current rates offered for similar debt.
The Company's financing lease obligations had an aggregate carrying value of $38.5 million and $39.3 million as of October 4, 2015 and December 28, 2014, respectively. The carrying values of the Company's financing lease obligations approximated their fair value as there has been minimal change in the Company's incremental borrowing rate. As of October 4, 2015, the 2021 Notes and financing lease obligations were classified as Level 2.
As of October 4, 2015, 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 18: Contingencies

The Company is conducting a number of environmental investigations and remedial actions at current and former locations of the Company and, along with other companies, has been named a potentially responsible party (“PRP”) for certain waste disposal sites. The Company accrues for environmental issues in the accounting period that the Company’s responsibility is established and when the cost can be reasonably estimated. The Company has accrued $12.1 million and $12.3 million as of October 4, 2015 and December 28, 2014, respectively, which represents its management’s estimate of the cost of the remediation of known environmental matters, and does not include any potential liability for related personal injury or property damage claims. 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 condensed consolidated financial statements. While it is possible that a loss exceeding the amounts recorded in the condensed 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 October 4, 2015 should not have a material adverse effect on the Company’s condensed 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.

25


Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
This quarterly report on Form 10-Q, including the following management’s discussion and analysis, contains forward-looking information that you should read in conjunction with the condensed consolidated financial statements and notes to the condensed consolidated financial statements that we have included elsewhere in this report. For this purpose, any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Words such as “believes,” “plans,” “anticipates,” “intends,” “expects,” “will” and similar expressions are intended to identify forward-looking statements. Our actual results may differ materially from the plans, intentions or expectations we disclose in the forward-looking statements we make. We have included important factors below under the heading “Risk Factors” in Part II, Item 1A. that we believe could cause actual results to differ materially from the forward-looking statements we make. We are not obligated to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview
We are a leading provider of products, services and solutions to the diagnostics, research, environmental, industrial and laboratory services markets. Through our advanced technologies, solutions, and services, we address critical issues that help to improve the health and safety of people and their environment.
We realigned our organization at the beginning of fiscal year 2015 to enable us to both deliver complete solutions targeted towards certain end markets and develop value-added applications and solutions to foster further expansion of those markets. OneSource, the multivendor service offering business that serves our life sciences end market, was moved from our Environmental Health segment into our Human Health segment. The results reported for the three and nine months ended October 4, 2015 reflect this new alignment of our operating segments. Financial information in this report relating to the three and nine months ended September 28, 2014 and the fiscal year ended 2014 have been retrospectively adjusted to reflect the changes to the operating segments. The principal products and services of our two operating segments are:
Human Health.    Concentrates on developing diagnostics, tools and applications to help detect diseases earlier and more accurately and to accelerate the discovery and development of critical new therapies. Our Human Health segment serves both the diagnostics and research markets.
Environmental Health.    Provides products, services and solutions to facilitate the creation of safer food and consumer products, more secure surroundings and efficient energy resources. Our Environmental Health segment serves the environmental, industrial and laboratory services markets.
As a result of the realignment, we reallocated goodwill from our Environmental Health segment to our Human Health segment based on the relative fair value, determined using the income approach, of the business within the historical Environmental Health segment. During the second quarter of 2015, we updated our preliminary analysis and the realignment resulted in $41.2 million of goodwill being reallocated from our Environmental Health segment to our Human Health segment as of December 28, 2014.
Overview of the Third Quarter of Fiscal Year 2015
Our fiscal year ends on the Sunday nearest December 31. We report fiscal years under a 52/53 week format and as a result, certain fiscal years will contain 53 weeks. The fiscal year ending January 3, 2016 ("fiscal year 2015") will include 53 weeks, while the fiscal year ended December 28, 2014 ("fiscal year 2014") included 52 weeks. The additional week in fiscal year 2015 has been reflected in our third quarter, which consisted of 14 weeks as compared to our third quarter of fiscal year 2014, which consisted of 13 weeks.
Our overall revenue in the third quarter of fiscal year 2015 was $563.4 million and increased $21.4 million, or 4%, as compared to the third quarter of fiscal year 2014, reflecting an increase of $14.7 million, or 7%, in our Environmental Health segment revenue and an increase of $6.7 million, or 2%, in our Human Health segment revenue. The increase in our Environmental Health segment revenue during the third quarter of fiscal year 2015 was primarily due to revenue from the acquisition of Perten Instruments Group AB ("Perten"), as well as increased demand in our laboratory services business, which was partially offset by unfavorable impacts from foreign currency. The increase in our Human Health segment revenue during the third quarter of fiscal year 2015 was primarily driven by our OneSource service offerings within our research market, as well as increased demand in our newborn and infectious disease screening business within our diagnostics market.
In our Human Health segment, we experienced growth during the third quarter of fiscal year 2015 in several of our products within our end markets, as compared to the third quarter of fiscal year 2014. In our research market, we experienced growth due to increased demand for our OneSource service offerings, as well as new product introductions, such as the Opera Phenix. Our OneSource business offers services designed to enable our customers to increase efficiencies and production time while reducing maintenance costs, all of which continue to be critical for our customers. In our diagnostics market, we

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experienced growth from continued expansion of our newborn and infectious disease screening solutions in the United States, as well as emerging markets such as China. Birth rates in the United States continue to stabilize and demand for greater access to newborn screening in rural areas outside the United States is also increasing, as evidenced by prenatal trends we saw during the third quarter of fiscal year 2015. The growth in our Human Health segment was partially offset by unfavorable impacts from foreign currency as the U.S. dollar strengthened, particularly versus the Euro. Demand in our medical imaging business was flat. As the rising cost of healthcare continues to be one of the critical issues facing our customers, we anticipate that the benefits of providing earlier detection of disease, which can result in savings of long-term health care costs as well as create better outcomes for patients, are increasingly valued and we expect to see continued growth in these markets.
In our Environmental Health segment, we had an increase in revenue for the third quarter of fiscal year 2015 as compared to the third quarter of fiscal year 2014, despite unfavorable impacts from foreign currency. The increase in revenue was primarily due to revenue from the acquisition of Perten, as well as growth in our materials characterization product family within our environmental and industrial markets, which was partially offset by unfavorable impacts from foreign currency. In addition, we had an increased demand in our laboratory services business, despite unfavorable impacts from foreign currency. We anticipate that the continued development of contaminant regulations and corresponding testing protocols will result in increased demand for efficient, analytically sensitive and information rich testing solutions.
Our consolidated gross margins increased 30 basis points in the third quarter of fiscal year 2015, as compared to the third quarter of fiscal year 2014, due to favorable changes in product mix, with an increase in sales of higher gross margin product offerings and benefits from our initiatives to improve our supply chain. Our consolidated operating margins increased 263 basis points in the third quarter of fiscal year 2015, as compared to the third quarter of fiscal year 2014, primarily due to higher gross margins, and lower restructuring charges and costs as a result of cost containment and productivity initiatives, which were partially offset by increased costs related to investments in new product development.
We believe we are well positioned to continue to take advantage of the spending trends in our end markets and to promote our efficiencies in markets where current conditions may increase demand for certain services. Overall, we believe that our strategic focus on Human Health and Environmental Health coupled with our breadth of end markets, deep portfolio of technologies and applications, leading market positions, global scale and financial strength will provide us with a foundation for growth.

Critical Accounting Policies and Estimates
The preparation of condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, warranty costs, bad debts, inventories, accounting for business combinations and dispositions, long-lived assets, income taxes, restructuring, pensions and other postretirement benefits, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe 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 under different assumptions or conditions.
Critical accounting policies are those policies that affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements. We believe our critical accounting policies include our policies regarding revenue recognition, warranty costs, allowances for doubtful accounts, inventory valuation, business combinations, value of long-lived assets, including goodwill and other intangibles, employee compensation and benefits, restructuring activities, gains or losses on dispositions and income taxes.
For a more detailed discussion of our critical accounting policies and estimates, please refer to the Notes to our audited consolidated financial statements and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 28, 2014 (our “2014 Form 10-K”), as filed with the Securities and Exchange Commission (the "SEC"). There have been no significant changes in our critical accounting policies and estimates during the nine months ended October 4, 2015.

Consolidated Results of Continuing Operations
Revenue
Revenue for the three months ended October 4, 2015 was $563.4 million, as compared to $542.0 million for the three months ended September 28, 2014, an increase of $21.4 million, or 4%, which includes an additional week in the third quarter of fiscal year 2015, an approximate 6% decrease in revenue attributable to unfavorable changes in foreign exchange rates and an approximate 4% increase in revenue attributable to acquisitions. The analysis in the remainder of this paragraph compares segment revenue for the three months ended October 4, 2015 as compared to the three months ended September 28, 2014 and

27


includes the effect of foreign exchange rate fluctuations and acquisitions. Our Environmental Health segment revenue increased $14.7 million, or 7%, due to an increase in our environmental and industrial markets revenue of $14.5 million and an increase in our laboratory services market revenue of $0.2 million. Our Human Health segment revenue increased $6.7 million, or 2%, due to an increase in our research market revenue of $5.8 million and an increase in our diagnostics market revenue of $0.8 million. As a result of adjustments to deferred revenue related to certain acquisitions required by business combination accounting rules, we did not recognize $0.2 million of revenue for the three months ended October 4, 2015 and $0.8 million for the three months ended September 28, 2014 that otherwise would have been recorded by the acquired businesses during each of the respective periods.
Revenue for the nine months ended October 4, 2015 was $1,654.2 million, as compared to $1,628.8 million for the nine months ended September 28, 2014, an increase of $25.4 million, or 2%, which includes an additional week in the third quarter of fiscal year 2015, an approximate 6% decrease in revenue attributable to unfavorable changes in foreign exchange rates and an approximate 4% increase in revenue attributable to acquisitions. The analysis in the remainder of this paragraph compares segment revenue for the nine months ended October 4, 2015 as compared to the nine months ended September 28, 2014 and includes the effect of foreign exchange rate fluctuations and acquisitions. Our Environmental Health segment revenue increased $23.8 million, or 4%, due to an increase in environmental and industrial markets revenue of $31.0 million, partially offset by a decrease in laboratory services market revenue of $7.3 million. Our Human Health segment revenue increased $1.7 million, or 0.2%, due to an increase in research market revenue of $6.1 million, which was partially offset by a decrease in diagnostics market revenue of $4.4 million. As a result of adjustments to deferred revenue related to certain acquisitions required by business combination accounting rules, we did not recognize $0.6 million of revenue for the nine months ended October 4, 2015 and $2.7 million for the nine months ended September 28, 2014 that otherwise would have been recorded by the acquired businesses during each of the respective periods.
Cost of Revenue
Cost of revenue for the three months ended October 4, 2015 was $308.8 million, as compared to $298.7 million for the three months ended September 28, 2014, an increase of $10.1 million, or 3%. As a percentage of revenue, cost of revenue decreased to 54.8% for the three months ended October 4, 2015, from 55.1% for the three months ended September 28, 2014, resulting in an increase in gross margin of 30 basis points from 44.9% for the three months ended September 28, 2014 to 45.2% for the three months ended October 4, 2015. Amortization of intangible assets decreased and was $10.7 million for the three months ended October 4, 2015, as compared to $12.4 million for the three months ended September 28, 2014. Stock-based compensation expense was $0.3 million for the three months ended October 4, 2015, as compared to $0.4 million for the three months ended September 28, 2014. The amortization of purchase accounting adjustments to record the inventory from certain acquisitions added an incremental expense of $0.8 million for the three months ended October 4, 2015. Acquisition related costs added an incremental expense of $0.02 million for each of the three months ended October 4, 2015 and September 28, 2014. In addition to the above items, the overall increase in gross margin was primarily the result of favorable changes in product mix, with an increase in sales of higher gross margin product offerings and benefits from our initiatives to improve our supply chain.
Cost of revenue for the nine months ended October 4, 2015 was $911.8 million, as compared to $901.8 million for the nine months ended September 28, 2014, an increase of $9.9 million, or 1%. As a percentage of revenue, cost of revenue decreased to 55.1% for the nine months ended October 4, 2015, from 55.4% for the nine months ended September 28, 2014, resulting in an increase in gross margin of 25 basis points from 44.6% for the nine months ended September 28, 2014 to 44.9% for the nine months ended October 4, 2015. Amortization of intangible assets decreased and was $32.2 million for the nine months ended October 4, 2015, as compared to $37.4 million for the nine months ended September 28, 2014. Stock-based compensation expense was $1.0 million for the nine months ended October 4, 2015, as compared to $1.1 million for the nine months ended September 28, 2014. The mark-to-market adjustment for postretirement benefit plans was a loss of $0.2 million for the nine months ended October 4, 2015, as compared to a gain of $0.1 million for the nine months ended September 28, 2014. Acquisition related costs added an incremental expense of $0.05 million for each of the nine months ended October 4, 2015 and September 28, 2014. The amortization of purchase accounting adjustments to record the inventory from certain acquisitions added an incremental expense of $7.3 million for the nine months ended October 4, 2015. In addition to the above items, the overall increase in gross margin was primarily the result of favorable changes in product mix, with an increase in sales of higher gross margin product offerings and benefits from our initiatives to improve our supply chain.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended October 4, 2015 were $147.7 million, as compared to $143.0 million for the three months ended September 28, 2014, an increase of $4.7 million, or 3%. As a percentage of revenue, selling, general and administrative expenses decreased and were 26.2% for the three months ended October 4, 2015, as compared to 26.4% for the three months ended September 28, 2014. Amortization of intangible assets was

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$8.0 million for each of the three months ended October 4, 2015 and September 28, 2014. Stock-based compensation expense increased and was $3.8 million for the three months ended October 4, 2015, as compared to $2.0 million for the three months ended September 28, 2014. Acquisition related costs for contingent consideration and other acquisition costs added an incremental expense of $0.1 million for the three months ended October 4, 2015, as compared to adding an incremental expense of $0.04 million for the three months ended September 28, 2014. In addition to the above items, the increase in selling, general and administrative expenses was primarily the result of increased sales and marketing expenses due to the impact of an additional week in the third quarter of fiscal year 2015, which was partially offset by lower costs as a result of cost containment and productivity initiatives.
Selling, general and administrative expenses for the nine months ended October 4, 2015 were $440.3 million, as compared to $442.7 million for the nine months ended September 28, 2014, a decrease of $2.3 million, or 1%. As a percentage of revenue, selling, general and administrative expenses decreased and were 26.6% for the nine months ended October 4, 2015, as compared to 27.2% for the nine months ended September 28, 2014. Amortization of intangible assets increased and was $26.0 million for the nine months ended October 4, 2015, as compared to $24.0 million for the nine months ended September 28, 2014. Stock-based compensation expense increased and was $11.1 million for the nine months ended October 4, 2015, as compared to $10.3 million for the nine months ended September 28, 2014. The mark-to-market adjustment for postretirement benefit plans was a loss of $0.8 million for the nine months ended October 4, 2015. Significant settlement and litigation expenses related to a particular case were $6.6 million for the nine months ended September 28, 2014. Acquisition related costs for contingent consideration and other acquisition costs added an incremental expense of $0.6 million for the nine months ended October 4, 2015, as compared to decreasing expenses by $1.3 million for the nine months ended September 28, 2014. The decrease in selling, general and administrative expenses was primarily the result of lower costs as a result of cost containment and productivity initiatives, which was partially offset by the impact of an additional week in fiscal year 2015.
Research and Development Expenses
Research and development expenses for the three months ended October 4, 2015 were $31.1 million, as compared to $30.4 million for the three months ended September 28, 2014, an increase of $0.7 million, or 2%. As a percentage of revenue, research and development expenses decreased and were 5.5% for the three months ended October 4, 2015, as compared to 5.6% for the three months ended September 28, 2014. Amortization of intangible assets decreased and was $0.1 million for the three months ended October 4, 2015, as compared to $0.2 million for the three months ended September 28, 2014. Stock-based compensation expense was $0.1 million and $0.04 million for the three months ended October 4, 2015 and September 28, 2014, respectively. The increase in research and development expenses was primarily the result of new product releases, investments in new product development and the impact of an additional week in fiscal year 2015, which was partially offset by lower costs as a result of cost containment and productivity initiatives.
Research and development expenses for the nine months ended October 4, 2015 were $95.9 million, as compared to $90.2 million for the nine months ended September 28, 2014, an increase of $5.7 million, or 6%. As a percentage of revenue, research and development expenses increased and were 5.8% for the nine months ended October 4, 2015, as compared to 5.5% for the nine months ended September 28, 2014. Amortization of intangible assets was $0.4 million for each of the nine months ended October 4, 2015 and September 28, 2014. Stock-based compensation expense was $0.4 million for each of the nine months ended October 4, 2015 and September 28, 2014. In addition to the above items, the increase in research and development expenses was primarily the result of new product releases and investments in new product development and the impact of an additional week in fiscal year 2015, which was partially offset by lower costs as a result of cost containment and productivity initiatives. During the first nine months of each of fiscal years 2015 and 2014, we directed research and development efforts towards the diagnostics and research markets within our Human Health segment, and the environmental, industrial and laboratory service markets within our Environmental Health segment, in order to help accelerate our growth initiatives.

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

We implemented restructuring plans in the second quarter of fiscal year 2015 and the third quarter of fiscal year 2014 consisting of workforce reductions principally intended to realign resources to emphasize growth initiatives (the "Q2 2015 Plan" and the "Q3 2014 Plan", respectively). We implemented restructuring plans in the second and first quarters of fiscal year

29


2014 consisting of workforce reductions principally intended to focus resources on higher growth end markets (the "Q2 2014 Plan" and the "Q1 2014 Plan", respectively). Details of the plans initiated in previous years (“Previous Plans”) are discussed more fully in Note 4 to the audited consolidated financial statements in the 2014 Form 10-K. We have also terminated various contractual commitments in connection with certain disposal activities and have 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 us.

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 the nine months ended October 4, 2015 and fiscal year 2014:
 
 
 
Initial Restructuring or Contract Termination Charges
 
Total
 
Date or Expected Date Payments Substantially Completed by
 
Headcount Reduction
 
Human Health
 
Environmental Health
 
 
 
(In thousands, except headcount data)
 
 
Q2 2015 Plan
97

 
$
1,850

 
$
4,160

 
$
6,010

 
Q2 FY2016
2015 Contract Termination Charges

 

 
25

 
25

 
Q4 FY2015
 
 
 
 
 
 
 
 
 
 
Q3 2014 Plan
152

 
7,126

 
5,925

 
13,051

 
Q4 FY2015
Q2 2014 Plan
22

 
545

 
190

 
735

 
Q2 FY2015
Q1 2014 Plan
17

 
370

 
197

 
567

 
Q4 FY2014
2014 Contract Termination Charges

 

 
1,545

 
1,545

 
Q4 FY2015
We expect to make payments under the Previous Plans for remaining residual lease obligations, with terms varying in length, through fiscal year 2022.

At October 4, 2015, we had $17.1 million recorded for accrued restructuring and contract termination charges, of which $12.1 million was recorded in short-term accrued restructuring and contract termination charges and $5.0 million was recorded in long-term liabilities. At December 28, 2014, we had $23.8 million recorded for accrued restructuring and contract termination charges, of which $17.1 million was recorded in short-accrued restructuring and $6.7 million was recorded in long-term liabilities. The following table summarizes our restructuring and contract termination accrual balances and related activity by restructuring plan, as well as contract termination, during the nine months ended October 4, 2015:
 
Balance at December 28, 2014
 
2015 Charges
 
2015 Changes in Estimates, Net
 
2015 Amounts Paid
 
Balance at October 4, 2015
 
(In thousands)
Severance:
Q2 2015 Plan(1)
$

 
$
6,010

 
$
(540
)
 
$
(3,166
)
 
$
2,304

Q3 2014 Plan
10,059

 

 

 
(5,257
)
 
4,802

Q2 2014 Plan(2)
251

 

 
(179
)
 
(8
)
 
64

Q1 2014 Plan(3)
92

 

 
(92
)