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 for the diagnostics, life sciences and applied markets. Through our advanced technologies and differentiated solutions, we address critical issues that help to improve lives and the world around us.

The principal products and services of our two operating segments are:

•Discovery & Analytical Solutions. Provides products and services targeted towards the life sciences market.

•Diagnostics. Develops diagnostics, tools and applications focused on clinically-oriented customers, especially within the reproductive health, immunodiagnostics and applied genomics markets.

Overview of the Third Quarter of Fiscal Year 2022



Our overall revenue in the third quarter of fiscal year 2022 was $711.8 million
which decreased by $149.5 million, or 17.4%, as compared to the third quarter of
fiscal year 2021, reflecting a decrease of $254.8 million, or 39%, in our
Diagnostics segment revenue, which was partially offset by an increase of $105.3
million, or 51%, in our Discovery & Analytical Solutions segment revenue. The
decrease in our Diagnostics segment revenue for the third quarter of fiscal year
2022 was driven by a decrease in revenue from our COVID-19 product offerings of
$231.2 million and a decrease of approximately 6% in revenue attributable to
unfavorable changes in foreign exchange rates, partially offset by an increase
in revenue from our core portfolio of $17.0 million. The increase in our
Discovery & Analytical Solutions segment revenue for the third quarter of fiscal
year 2022 was driven by a 42% increase in revenue attributable to acquisitions
and divestitures, and an increase of $105.3 million in our life sciences market
revenue, partially offset by a 5% decrease in revenue due to unfavorable changes
in foreign exchange rates.

Our consolidated gross margins decreased 352 basis points in the third quarter
of fiscal year 2022, as compared to the third quarter of fiscal year 2021,
primarily due to increased amortization of acquired intangible assets and lower
COVID-19 revenue partially offset by a favorable shift in product mix and
service productivity. For the third quarter of fiscal year 2022, supply chain
disruptions and inflation did not materially impact our results of operations as
compared to the third quarter of fiscal year 2021 as the effects of our
initiatives to reduce transportation costs more than offset the impact of
inflation on our raw materials purchases. Our consolidated operating margins
decreased 714 basis points in the third quarter of fiscal year 2022, as compared
to the third quarter of fiscal year 2021, primarily due to lower COVID-19
revenue, increased costs related to amortization of acquired intangible assets,
and investments in new product development and growth initiatives.


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 accounting for business combinations, long-lived assets, including
goodwill and other intangible assets and employee compensation and benefits. 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
policies
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regarding business combinations, valuation of long-lived assets, including goodwill and other intangibles and employee compensation and benefits.



For a more detailed discussion of our critical accounting policies and
estimates, 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 January 2, 2022 (our "2021 Form 10-K"), as filed with the Securities and
Exchange Commission. There have been no significant changes in our critical
accounting policies and estimates during the nine months ended October 2, 2022.

Consolidated Results of Continuing Operations

Revenue



Revenue for the three months ended October 2, 2022 was $711.8 million, as
compared to $861.3 million for the three months ended October 3, 2021, a
decrease of $149.5 million, or approximately 17.4%, which includes an
approximate 11% increase in revenue attributable to acquisitions and
divestitures, partially offset by a 6% decrease in revenue attributable to
unfavorable changes in foreign exchange rates. The analysis in the remainder of
this paragraph compares segment revenue for the three months ended October 2,
2022 as compared to the three months ended October 3, 2021 and includes the
effect of foreign exchange rate fluctuations, acquisitions and divestitures. Our
Diagnostics segment revenue was $399.0 million for the three months ended
October 2, 2022, as compared to $653.8 million for the three months ended
October 3, 2021, a decrease of $254.8 million, or 39%, primarily due to a
decrease in revenue from our COVID-19 product offerings of $231.2 million and a
decrease of approximately 6% in revenue attributable to unfavorable changes in
foreign exchange rates, partially offset by an increase in revenue from our core
portfolio of $17.0 million. Our Discovery & Analytical Solutions segment revenue
was $312.8 million for the three months ended October 2, 2022, as compared to
$207.5 million for the three months ended October 3, 2021, an increase of $105.3
million, or 51%, driven by a 42% increase in revenue attributable to
acquisitions and divestitures, and an increase of $105.3 million in our life
sciences market revenue, partially offset by a 5% decrease in revenue due to
unfavorable changes in foreign exchange rates. 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
each of the three months ended October 2, 2022 and October 3, 2021 that
otherwise would have been recorded by the acquired businesses during each of the
respective periods.

Revenue for the nine months ended October 2, 2022 was $2,570.6 million, as
compared to $2,799.9 million for the nine months ended October 3, 2021, a
decrease of $229.3 million, or approximately 8%, which includes an approximate
12% increase in revenue attributable to acquisitions and divestitures, partially
offset by a 4% decrease in revenue attributable to unfavorable changes in
foreign exchange rates. The analysis in the remainder of this paragraph compares
segment revenue for the nine months ended October 2, 2022 as compared to the
nine months ended October 3, 2021 and includes the effect of foreign exchange
rate fluctuations, acquisitions and divestitures. Our Diagnostics segment
revenue was $1,625.1 million for the nine months ended October 2, 2022, as
compared to $2,222.5 million for the nine months ended October 3, 2021, a
decrease of $597.4 million, or 27%, primarily due to a decrease in revenue from
our COVID-19 product offerings of $597.9 million and a decrease of approximately
4% in revenue due to unfavorable changes in foreign exchange rates, which were
partially offset by an increase in revenue across our core portfolio of $83.2
million. Our Discovery & Analytical Solutions segment revenue was $945.5 million
for the nine months ended October 2, 2022, as compared to $577.4 million for the
nine months ended October 3, 2021, an increase of $368.1 million, or 64%, driven
by a 50% increase in revenue attributable to acquisitions and divestitures, and
an increase of $368.1 million in our life sciences market revenue, partially
offset by a decrease of approximately 3% in revenue due to unfavorable changes
in foreign exchange rates. 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 2, 2022 and $2.4 million of revenue for the nine months ended October 3,
2021 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 2, 2022 was $304.8 million,
as compared to $338.5 million for the three months ended October 3, 2021, a
decrease of $33.7 million, or approximately 10%. As a percentage of revenue,
cost of revenue increased to 42.8% for the three months ended October 2, 2022,
from 39.3% for the three months ended October 3, 2021, resulting in a decrease
in gross margin of 352 basis points to 57.2% for the three months ended
October 2, 2022, from 60.7% for the three months ended October 3, 2021.
Amortization of intangible assets increased and was $35.3 million for the three
months ended October 2, 2022, as compared to $28.5 million for the three months
ended October 3, 2021. Amortization of intangible assets from our recent
acquisitions amounted to $23.2 million for the three months ended October 2,
2022. The amortization of purchase accounting adjustments to record the
inventory from certain acquisitions added an incremental expense of $11.3
million for the three months ended October 2, 2022, as compared to $9.4 million
for the three months ended
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October 3, 2021. Stock compensation expense related to awards given to BioLegend
employees post-acquisition added an incremental expense of $1.5 million for the
three months ended October 2, 2022. Purchase accounting adjustments for
depreciation on property, plant and equipment added an incremental expense of
$0.1 million for the three months ended October 2, 2022. The overall decrease in
gross margin was partially offset by a favorable shift in product mix and
service productivity.

Cost of revenue for the nine months ended October 2, 2022 was $1,017.1 million,
as compared to $1,009.7 million for the nine months ended October 3, 2021, an
increase of $7.4 million, or approximately 1%. As a percentage of revenue, cost
of revenue increased to 39.6% for the nine months ended October 2, 2022, from
36.1% for the nine months ended October 3, 2021, resulting in a decrease in
gross margin of 350 basis points to 60.4% for the nine months ended October 2,
2022, from 63.9% for the nine months ended October 3, 2021. For the nine months
ended October 2, 2022, costs of goods sold increased by approximately $7.0
million, as compared to the nine months ended October 3, 2021, as a result of
supply chain disruptions and inflation. Amortization of intangible assets
increased and was $107.1 million for the nine months ended October 2, 2022, as
compared to $64.3 million for the nine months ended October 3, 2021.
Amortization of intangible assets from our recent acquisitions amounted to $68.8
million for the nine months ended October 2, 2022. The amortization of purchase
accounting adjustments to record the inventory from certain acquisitions added
an incremental expense of $45.0 million for the nine months ended October 2,
2022, as compared to $14.7 million for the nine months ended October 3, 2021.
Stock compensation expense related to awards given to BioLegend employees
post-acquisition added an incremental expense of $4.7 million for the nine
months ended October 2, 2022. Purchase accounting adjustments for depreciation
on property, plant and equipment added an incremental expense of $0.4 million
for the nine months ended October 2, 2022. The overall decrease in gross margin
was partially offset by a favorable shift in product mix and service
productivity.

Selling, General and Administrative Expenses



Selling, general and administrative expenses for the three months ended
October 2, 2022 were $240.0 million, as compared to $275.9 million for the three
months ended October 3, 2021, a decrease of $35.9 million, or 13%. As a
percentage of revenue, selling, general and administrative expenses increased
and were 33.7% for the three months ended October 2, 2022, as compared to 32.0%
for the three months ended October 3, 2021. Amortization of intangible assets
increased and was $56.2 million for the three months ended October 2, 2022, as
compared to $34.8 million for the three months ended October 3, 2021.
Amortization of intangible assets from our recent acquisitions amounted to $33.4
million for the three months ended October 2, 2022. Purchase accounting
adjustments decreased expenses by $2.1 million for the three months ended
October 2, 2022, which primarily consisted of a change in contingent
consideration, as compared to adding incremental expense of $1.2 million for the
three months ended October 3, 2021. Acquisition and divestiture-related
expenses, which primarily consisted of legal, due diligence and integration
costs, added an incremental expense of $5.7 million for the three months ended
October 2, 2022, as compared to $46.4 million for the three months ended
October 3, 2021. Asset impairment costs added an incremental expense of $3.9
million for the three months ended October 3, 2021. Legal and settlement costs
for significant litigation matters, net of reversals, were $0.6 million for the
three months ended October 2, 2022. In addition to the above items, the decrease
in selling, general and administrative expenses was primarily the result of
lower costs resulting from cost containment and productivity initiatives, which
were partially offset by costs related to investments in people, digital
capabilities, innovation, and recent acquisitions.

Selling, general and administrative expenses for the nine months ended
October 2, 2022 were $765.7 million, as compared to $681.3 million for the nine
months ended October 3, 2021, an increase of $84.4 million, or 12%. As a
percentage of revenue, selling, general and administrative expenses increased
and were 29.8% for the nine months ended October 2, 2022, as compared to 24.3%
for the nine months ended October 3, 2021. Amortization of intangible assets
increased and was $173.4 million for the nine months ended October 2, 2022, as
compared to $94.3 million for the nine months ended October 3, 2021.
Amortization of intangible assets from our recent acquisitions amounted to
$101.9 million for the nine months ended October 2, 2022. Purchase accounting
adjustments decreased expenses by $0.6 million for the nine months ended
October 2, 2022, which primarily consisted of a change in contingent
consideration, as compared to adding incremental expenses of $1.6 million for
the nine months ended October 3, 2021. Acquisition and divestiture-related
expenses, which primarily consisted of legal, due diligence and integration
costs, added an incremental expense of $17.1 million for the nine months ended
October 2, 2022, as compared to $54.3 million for the nine months ended
October 3, 2021. Asset impairment costs added an incremental expense of $3.9
million for the nine months ended October 3, 2021. Legal and settlement costs
for significant litigation matters, net of reversals, decreased expenses by $0.6
million for the nine months ended October 2, 2022. In addition to the above
items, the increase in selling, general and administrative expenses was
primarily the result of costs related to investments in people, digital
capabilities, innovation, and recent acquisitions.
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Research and Development Expenses



Research and development expenses for the three months ended October 2, 2022
were $53.5 million, as compared to $49.4 million for the three months ended
October 3, 2021, an increase of $4.1 million, or 8%. The increase in research
and development expenses from our recent acquisitions were $9.7 million for the
three months ended October 2, 2022. As a percentage of revenue, research and
development expenses increased and were 7.5% for the three months ended
October 2, 2022, as compared to 5.7% for the three months ended October 3, 2021.
Stock compensation expense related to awards given to BioLegend employees
post-acquisition added an incremental expense of $1.3 million for the three
months ended October 2, 2022. Purchase accounting adjustments for depreciation
on property, plant and equipment added an incremental expense of $0.1 million
for the three months ended October 2, 2022. Excluding the factors above, the net
increase in research and development expenses was due to timing of non-COVID-19
investments in new product development, partially offset by a decrease in
COVID-19 related research and development expenses.

Research and development expenses for the nine months ended October 2, 2022 were
$167.1 million, as compared to $139.8 million for the nine months ended
October 3, 2021, an increase of $27.3 million, or 20%. The increase in research
and development expenses from our recent acquisitions were $29.3 million for the
nine months ended October 2, 2022. As a percentage of revenue, research and
development expenses increased and were 6.5% for the nine months ended
October 2, 2022, as compared to 5.0% for the nine months ended October 3, 2021.
Stock compensation related to awards given to BioLegend employees
post-acquisition added an incremental expense of $4.1 million for the nine
months ended October 2, 2022. Purchase accounting adjustments for depreciation
on property, plant and equipment added an incremental expense of $0.2 million
for the nine months ended October 2, 2022. Excluding the factors above, the net
increase in research and development expenses was due to timing of non-COVID-19
investments in new product development, partially offset by a decrease in
COVID-19 related research and development expenses.

Restructuring and Other Costs, Net



We implemented restructuring plans in the first, second and third quarters of
fiscal year 2022 consisting of workforce reductions principally intended to
realign resources to emphasize growth initiatives and integrate new acquisitions
(the "Q1 2022 Plan", "Q2 2022 Plan" and "Q3 2022 Plan", respectively). We
implemented restructuring plans in each quarter of fiscal year 2021 consisting
of workforce reductions principally intended to realign resources to emphasize
growth initiatives and integrate new acquisitions (the "Q1 2021 Plan", "Q2 2021
Plan", "Q3 2021 Plan" and "Q4 2021 Plan", respectively). Details of
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the plans initiated in previous years (the "Previous Plans") are discussed more
fully in Note 4, Restructuring and Other Costs, Net, to our audited consolidated
financial statements in the 2021 Form 10-K.

The following table summarizes the reductions in headcount, the initial restructuring or contract termination charges by reporting segment, and the dates by which payments were substantially completed, or the dates by which payments are expected to be substantially completed, for restructuring actions implemented during fiscal years 2022 and 2021:



                                        Workforce Reductions                                Closure of Excess Facility                                    (Expected) Date Payments Substantially Completed by

                                            Discovery &                                 Discovery &
                      Headcount             Analytical                                  Analytical
                      Reduction              Solutions             Diagnostics           Solutions           Diagnostics            Total                Severance                               Excess Facility
                                                             (In thousands, except headcount data)
Q3 2022 Plan              40             $        2,074          $      1,122          $        -                   -             $ 3,196                Q4 FY2022                                      -
Q2 2022 Plan             243                      7,336                 2,052                   -                   -               9,388                Q3 FY2022                                      -
Q1 2022 Plan              81                      5,832                   399                   -                   -               6,231                Q4 FY2022                                      -
Q4 2021 Plan              31                      3,139                    77                 150                   -               3,366                Q3 FY2022                                  Q1 FY2023
Q3 2021 Plan              39                        420                   366                   -                   -                 786                Q2 FY2022                                      -
Q2 2021 Plan              25                        968                   564                   -                   -               1,532                Q1 FY2022                                      -
Q1 2021 Plan              77                      3,941                 1,615                   -                   -               5,556                Q4 FY2021                                      -


We terminated various contractual commitments in connection with certain
disposal activities and have recorded charges for the costs of terminating these
contracts before the end of their terms and the costs that will continue to be
incurred for the remaining terms without economic benefit to the Company. We
recorded net pre-tax (gains) charges of $(0.1) million and $7.9 million in the
Discovery & Analytical Solutions segment during the three and nine months ended
October 2, 2022, respectively, as a result of these contract terminations. We
recorded net pre-tax gains of $0.1 million in the Diagnostics segment during the
nine months ended October 2, 2022, as a result of changes in estimates from
prior contract terminations.

We recorded pre-tax charges of $1.4 million associated with closure of
facilities during the nine months ended October 2, 2022 in the Discovery &
Analytical Solutions segment. We recorded pre-tax charges of $0.2 million
associated with closure of facilities during the nine months ended October 2,
2022 in the Diagnostics segment. We expect to make payments on these relocation
activities through end of fiscal year 2022.

Interest and Other Expense, Net

Interest and other expense, net, consisted of the following:



                                                  Three Months Ended                        Nine Months Ended
                                           October 2,           October 3,           October 2,           October 3,
                                              2022                 2021                 2022                 2021
                                                                         (In thousands)
Interest income                           $     (667)         $      (544)         $    (2,024)         $    (1,322)
Interest expense                              25,931               43,531               81,447               74,407

Change in fair value of financial
securities                                     5,106               19,365               14,321               (8,566)
Other components of net periodic pension
credit                                        (2,602)              (3,537)              (7,718)             (10,583)
Other expense, net                               870                1,734                5,814                  796

Total interest and other expense, net $ 28,638 $ 60,549

$ 91,840 $ 54,732




The decrease in interest and other expense, net, for the three months ended
October 2, 2022, as compared to the three months ended October 3, 2021, was
primarily due to a decrease of $17.6 million in interest expense, a decrease in
the change in fair value of financial securities of $14.3 million, and a
decrease in other expense, net of $0.9 million, partially offset by an increase
in other components of net periodic pension cost of $0.9 million. Interest
expense for the three months ended October 2, 2022 was lower, as compared to
interest expense for the three months ended October 3, 2021, primarily due to a
one-time $23.3 million of bridge financing and debt pre-issuance hedging costs
that were recognized in expense in the third quarter of fiscal year 2021.
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The increase in interest and other expense, net, for the nine months ended
October 2, 2022, as compared to the nine months ended October 3, 2021, was
primarily due to an increase of $7.0 million in interest expense, which was the
result of an overall increase in debt, a change in fair value of financial
securities of $14.3 million that was recognized during the nine months ended
October 2, 2022 as compared to $(8.6) million that was recognized during the
nine months ended October 3, 2021, an increase in other components of net
periodic pension cost of $2.9 million and an increase in other expense, net of
$5.0 million.

Provision for Income Taxes

The provision for income taxes from continuing operations was $12.6 million for
the three months ended October 2, 2022, as compared to $27.4 million for the
three months ended October 3, 2021. The provision for income taxes from
continuing operations was $98.2 million for the nine months ended October 2,
2022, as compared to $198.5 million for the nine months ended October 3, 2021.

The effective tax rate from continuing operations was 15.4% and 19.1% for the
three and nine months ended October 2, 2022, respectively, as compared to 20.3%
and 22.0% for the three and nine months ended October 3, 2021, respectively. The
lower effective tax rate during the three and nine months ended October 2, 2022,
as compared to the three and nine months ended October 3, 2021, was primarily
due to projected lower income in certain higher tax rate jurisdictions in fiscal
year 2022 as compared to fiscal year 2021, and a one-time discrete expense of
$13.7 million due to the remeasurement of deferred tax liabilities in connection
with a rate change in the United Kingdom that was recorded in the three months
ended October 3, 2021.

During the three months ended October 2, 2022, we recorded a net discrete
benefit of $2.8 million, primarily related to a $2.2 million remeasurement of
U.S. state deferred tax liabilities, a net change in tax reserves of $0.6
million and excess tax benefits on stock compensation of $0.3 million, offset by
return to provision adjustments of $0.3 million. During the nine months ended
October 2, 2022, we recorded a net discrete benefit of $3.7 million, primarily
related to a $1.7 million remeasurement of U.S. state and foreign deferred tax
liabilities, excess tax benefits on stock compensation of $1.8 million, a net
change in tax reserves of $0.1 million and return to provision adjustments of
$0.1 million.

The net tax benefit related to discrete items in the third quarter of fiscal
year 2021 was $0.3 million, primarily related to a $1.2 million remeasurement of
foreign deferred tax liabilities and excess tax benefits on stock compensation
of $0.6 million, offset by an increase in tax reserves of $1.4 million and
return to provision adjustments of $0.1 million. The discrete tax expense for
the nine months ended October 3, 2021 included $13.7 million due to the
remeasurement of United Kingdom deferred tax liabilities on long-lived purchase
accounting intangibles and a $1.5 million tax benefit related to other net
United Kingdom deferred tax assets and liabilities in connection with the United
Kingdom rate change. The remaining discrete tax benefit for the nine months
ended October 3, 2021, excluding the United Kingdom rate change, was $5.1
million, primarily related to excess tax benefits on stock compensation of $4.5
million and $6.4 million resulting from a transaction that was completed during
the second quarter of fiscal year 2021, offset by an accrual for uncertain tax
positions of $3.9 million, and return to provision adjustments of $1.9 million.


Reporting Segment Results of Continuing Operations

Discovery & Analytical Solutions



Revenue for the three months ended October 2, 2022 was $312.8 million, as
compared to $207.5 million for the three months ended October 3, 2021, an
increase of $105.3 million, or 51%, which includes an approximate 42% increase
in revenue attributable to acquisitions and divestitures and a decrease of
approximately 5% in revenue attributable to unfavorable changes in foreign
exchange rates. The life sciences market revenue increased by $105.3 million as
a result of an increase in revenue from businesses acquired in fiscal year 2021
along with organic growth in our pharmaceutical and biotechnology markets.

Revenue for the nine months ended October 2, 2022 was $945.5 million, as
compared to $577.4 million for the nine months ended October 3, 2021, an
increase of $368.1 million, or 64%, which includes an approximate 50% increase
in revenue attributable to acquisitions and divestitures and a decrease of
approximately 3% in revenue attributable to unfavorable changes in foreign
exchange rates. The life sciences market revenue increased by $368.1 million as
a result of an increase in revenue from businesses acquired in fiscal year 2021
along with organic growth in our pharmaceutical and biotechnology markets.

Operating income (loss) from continuing operations for the three months ended
October 2, 2022 was $32.6 million, as compared to $(19.3) million for the three
months ended October 3, 2021, an increase of $51.9 million, or 269%.
Amortization of intangible assets was $64.4 million for the three months ended
October 2, 2022, as compared to $25.8 million for the three months ended
October 3, 2021. Amortization of intangible assets from our recent acquisitions
amounted to $51.5 million for the three months ended October 2, 2022.
Restructuring and other charges, net, were $1.6 million for the three months
ended
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October 2, 2022, as compared to $1.4 million for the three months ended
October 3, 2021. The amortization of purchase accounting adjustments to record
the inventory from certain acquisitions was $11.1 million for the three months
ended October 2, 2022, as compared to $5.5 million for the three months ended
October 3, 2021. Acquisition and divestiture-related expenses, contingent
consideration and other costs added an incremental expense of $6.6 million for
the three months ended October 2, 2022, as compared to $44.6 million for the
three months ended October 3, 2021. Legal and settlement costs for significant
litigation matters, net of reversals, increased expenses by $0.6 million for the
three months ended October 2, 2022. Excluding the factors noted above, operating
income increased for the three months ended October 2, 2022, as compared to the
three months ended October 3, 2021, primarily as a result of higher sales volume
and favorable product mix, partially offset by increased investments in new
product development and growth initiatives.

Operating income from continuing operations for the nine months ended October 2,
2022 was $106.0 million, as compared to $50.6 million for the nine months ended
October 3, 2021, an increase of $55.4 million, or 109%. Amortization of
intangible assets was $185.1 million for the nine months ended October 2, 2022,
as compared to $50.9 million for the nine months ended October 3, 2021.
Amortization of intangible assets from our recent acquisitions amounted to
$154.3 million for the nine months ended October 2, 2022. Restructuring and
other charges, net, were $11.7 million for the nine months ended October 2,
2022, as compared to $6.9 million for the nine months ended October 3, 2021. The
amortization of purchase accounting adjustments to record the inventory from
certain acquisitions was $44.2 million for the nine months ended October 2,
2022, as compared to $7.2 million for the nine months ended October 3, 2021.
Acquisition and divestiture-related expenses, contingent consideration and other
costs added an incremental expense of $11.2 million for the nine months ended
October 2, 2022, as compared to $48.7 million for the nine months ended
October 3, 2021. Legal and settlement costs for significant litigation matters,
net of reversals, decreased expenses by $0.6 million for the nine months ended
October 2, 2022. Excluding the factors noted above, operating income increased
for the nine months ended October 2, 2022, as compared to the nine months ended
October 3, 2021, primarily as a result of higher sales volume and favorable
product mix, partially offset by increased investments in new product
development and growth initiatives.

Diagnostics



Revenue for the three months ended October 2, 2022 was $399.0 million, as
compared to $653.8 million for the three months ended October 3, 2021, a
decrease of $254.8 million, or 39%, which includes a 6% decrease in revenue
attributable to unfavorable changes in foreign exchange rates, partially offset
by an increase of approximately 1% in revenue attributable to acquisitions and
divestitures. 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 in our Diagnostics segment for each of the
three months ended October 2, 2022 and October 3, 2021 that otherwise would have
been recorded by the acquired businesses during each of the respective periods.
The decrease in our Diagnostics segment revenue for the three months ended
October 2, 2022 was due to a decrease in revenue from our COVID-19 product
offerings of $231.2 million and a decrease of approximately 6% in revenue due to
unfavorable changes in foreign exchange rates, partially offset by an increase
in revenue from our core portfolio of $17.0 million.

Revenue for the nine months ended October 2, 2022 was $1,625.1 million, as
compared to $2,222.5 million for the nine months ended October 3, 2021, a
decrease of $597.4 million, or 27%, which includes a 4% decrease in revenue
attributable to unfavorable changes in foreign exchange rates, partially offset
by an increase of approximately 2% in revenue attributable to acquisitions and
divestitures. 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 in our Diagnostics segment for each of the
nine months ended October 2, 2022 and October 3, 2021 that otherwise would have
been recorded by the acquired businesses during each of the respective periods.
The decrease in our Diagnostics segment revenue for the nine months ended
October 2, 2022 was due to a decrease in revenue from our COVID-19 product
offerings of $597.9 million and a decrease of approximately 4% in revenue due to
unfavorable changes in foreign exchange rates, which were partially offset by
increase in revenue across our core portfolio of $83.2 million. Due to the
termination of our contract with the California Department of Public Health, we
recognized the contract liability pertaining to the nonrefundable prepayment
amounting to $117.8 million as revenue in the second quarter of fiscal year
2022.

Operating income from continuing operations for the three months ended
October 2, 2022 was $94.7 million, as compared to $237.9 million for the three
months ended October 3, 2021, a decrease of $143.2 million, or 60%. Amortization
of intangible assets decreased and was $27.1 million for the three months ended
October 2, 2022, as compared to $37.5 million for the three months ended
October 3, 2021. Amortization of intangible assets from our recent acquisitions
amounted to $5.1 million for the three months ended October 2, 2022.
Restructuring and other charges, net, were $1.2 million for the three months
ended October 2, 2022, as compared to $0.6 million for the three months ended
October 3, 2021. The amortization of purchase accounting adjustments to record
the inventory from certain acquisitions was $0.3 million for the three months
ended October 2, 2022, as compared to $3.9 million for the three months ended
October 3, 2021. Acquisition and divestiture-related expenses, contingent
consideration and other costs added an incremental expense of $0.2 million for
the three months ended
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October 2, 2022, as compared to $3.2 million for the three months ended
October 3, 2021. Excluding the factors noted above, operating income decreased
for the three months ended October 2, 2022, as compared to the three months
ended October 3, 2021, primarily as a result of lower sales volume related to
COVID-19 product offerings and unfavorable product mix.

Operating income from continuing operations for the nine months ended October 2,
2022 was $553.9 million, as compared to $965.7 million for the nine months ended
October 3, 2021, a decrease of $411.8 million, or 43%. Amortization of
intangible assets decreased and was $95.4 million for the nine months ended
October 2, 2022, as compared to $107.7 million for the nine months ended
October 3, 2021. Amortization of intangible assets from our recent acquisitions
amounted to $16.3 million for the nine months ended October 2, 2022.
Restructuring and other charges, net, were $3.7 million for each of the nine
months ended October 2, 2022 and October 3, 2021, respectively. The amortization
of purchase accounting adjustments to record the inventory from certain
acquisitions was $0.8 million for the nine months ended October 2, 2022, as
compared to $7.6 million for the nine months ended October 3, 2021. Acquisition
and divestiture-related expenses, contingent consideration and other costs added
an incremental expense of $15.2 million for the nine months ended October 2,
2022, as compared to $9.8 million for the nine months ended October 3, 2021.
Excluding the factors noted above, operating income decreased for the nine
months ended October 2, 2022, as compared to the nine months ended October 3,
2021, primarily as a result of lower sales volume related to COVID-19 product
offerings and unfavorable product mix.


Discontinued Operations



In August 2022, we entered into a Master Purchase and Sale Agreement (the
"Purchase Agreement") with Polaris Purchaser, L.P. (the "Purchaser"), a Delaware
limited partnership owned by funds managed by affiliates of New Mountain Capital
L.L.C. (the "Sponsor"), under which we agreed to sell to the Purchaser certain
assets and the equity interests of certain entities constituting our Analytical,
Food and Enterprise Services businesses (the "Business") (as further defined in
the Purchase Agreement), for cash consideration of up to approximately $2.45
billion and the Purchaser's assumption of certain liabilities relating to the
Business (collectively, the "Transaction"). Approximately $2.30 billion of the
purchase price will be payable in connection with the closing, subject to
certain customary adjustments, which includes $75.0 million in deferred payments
tied to the transfer of the PerkinElmer brand and related trademarks to the
Purchaser (which may be completed within 24 months following the date of the
closing at our election). The Purchase Agreement also provides for potential
post-closing payments totaling up to $150.0 million, which are contingent on the
exit valuation the Sponsor and its affiliated funds receive on a sale or other
capital events related to the Business. The Transaction is expected to close in
the first quarter of fiscal year 2023, subject to regulatory approvals and other
customary closing conditions. The Business had been recorded in the Discovery &
Analytical Solutions segment. The sale of the Business represents a strategic
shift that will have a major effect on our operations and financial statements.
Accordingly, we have classified the assets and liabilities related to the
Business as assets and liabilities of discontinued operations in our
consolidated balance sheets and results of operations are classified as income
from discontinued operations in our consolidated statements of operations.

The summary pre-tax operating results of the discontinued operations, were as follows for the three and nine months ended:



                                                   Three Months Ended                       Nine Months Ended
                                             October 2,          October 3,          October 2,          October 3,
                                                2022                2021                2022                2021
                                                                         (In thousands)
Revenue                                     $  320,616          $  305,369          $  950,821          $  902,946
Cost of revenue                                208,669             196,393             639,937             590,960
Selling, general and administrative
expenses                                        71,893              63,173             210,535             190,920
Research and development expenses               14,174              19,187              50,575              54,895
Restructuring and other costs, net                 487                 200              13,130               2,501
Operating income                                25,393              26,416              36,644              63,670
Other expense (income), net                        213                (240)                640                (659)
Income from discontinued operations before
income taxes                                $   25,180          $   26,656

$ 36,004 $ 64,329

We recorded a tax provision on discontinued operations and dispositions of $9.3 million and $6.5 million for the three months ended October 2, 2022 and October 3, 2021, respectively. We recorded a tax provision on discontinued operations and dispositions of $9.7 million and $16.7 million for the nine months ended October 2, 2022 and October 3, 2021, respectively.


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Liquidity and Capital Resources

We require cash to pay our operating expenses, make capital expenditures, make
strategic acquisitions, service our debt and other long-term liabilities,
repurchase shares of our common stock and pay dividends on our common stock. Our
principal sources of funds are from our operations, borrowing capacity available
under our senior unsecured credit facility and access to debt markets. We
anticipate that our internal operations will generate sufficient cash to fund
our operating expenses, capital expenditures, smaller acquisitions, interest
payments on our debt and dividends on our common stock. However, we expect to
use external sources to satisfy the balance of our debt when due, any larger
acquisitions and other long-term liabilities, such as contributions to our
postretirement benefit plans. The proposed sale of the Business classified as
discontinued operations, which is expected to close in the first quarter of
fiscal year 2023, is expected to generate approximately $2.23 billion of
proceeds. The Company expects to use these proceeds through a combination of
funding upcoming debt maturities, opportunistic share repurchases and continued
strategic and value creating acquisitions.

We and our subsidiaries may from time to time, in our sole discretion, purchase,
repay, redeem or retire any of our outstanding debt securities (including any
publicly issued debt securities), in privately negotiated or open market
transactions, by tender offer or otherwise, or extend or refinance any of our
outstanding indebtedness.

Principal factors that could affect the availability of our internally generated funds include:

•changes in sales due to weakness in markets in which we sell our products and services, and

•changes in our working capital requirements and capital expenditures.

Principal factors that could affect our ability to obtain cash from external sources include:

•financial covenants contained in the financial instruments controlling our borrowings that limit our total borrowing capacity,

•increases in interest rates applicable to our outstanding variable rate debt,



•a ratings downgrade that could limit the amount we can borrow under our senior
unsecured revolving credit facility and our overall access to the corporate debt
market,

•increases in interest rates or credit spreads, as well as limitations on the
availability of credit, that affect our ability to borrow under future potential
facilities on a secured or unsecured basis,

•a decrease in the market price for our common stock, and

•volatility in the public debt and equity markets.



At October 2, 2022, we had cash and cash equivalents of $400.7 million, of which
$106.3 million was held by our non-U.S. subsidiaries, and we had $1.5 billion of
borrowing capacity available under our senior unsecured revolving credit
facility. We had no other liquid investments at October 2, 2022.

We utilize a variety of tax planning and financing strategies to ensure that our
worldwide cash is available in the locations in which it is needed. We use our
non-U.S. cash for needs outside of the U.S. including foreign operations,
capital investments, acquisitions and repayment of debt. In addition, we
transfer cash to the U.S. using nontaxable returns of capital, distribution of
previously taxed income, as well as dividends, where the related income tax cost
is managed efficiently. We have accrued tax expense on the unremitted earnings
of foreign subsidiaries as required by the Tax Cuts and Jobs Act of 2017 (the
"Tax Act") and where the foreign earnings are not considered permanently
reinvested. In accordance with the Tax Act, we are making scheduled annual cash
payments on our accrued transition tax. As of the end of fiscal year 2021, we
identified approximately $1.2 billion in earnings that we no longer considered
permanently reinvested, and have recorded a provision of approximately $37.1
million for the U.S. federal, U.S. state and non-U.S. taxes that would fall due
when such earnings are repatriated. We began repatriating such earnings to the
U.S. in the first quarter of fiscal year 2022 and expect to continue the
repatriation beyond fiscal year 2022. No additional income tax expense has been
provided for any remaining undistributed foreign earnings, or any additional
outside basis difference inherent in these entities, as these amounts continue
to be indefinitely reinvested.

On July 31, 2020, our Board of Directors (the "Board") authorized us to
repurchase shares of common stock for an aggregate amount up to $250.0 million
under a stock repurchase program (the "Repurchase Program"). On July 22, 2022,
the Repurchase Program was terminated by the Board and the Board authorized us
to repurchase shares of common stock for an aggregate amount up to $300.0
million under a new stock repurchase program (the "New Repurchase Program"). No
shares remain available for repurchase under the Repurchase Program due to its
termination. The New Repurchase Program will expire on July 22, 2024 unless
terminated earlier by the Board and may be suspended or discontinued at any
time. During the three months ended October 2, 2022, we had no stock repurchases
under the Repurchase Program or the New Repurchase
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Program. As of October 2, 2022, $300.0 million remained available for aggregate repurchases of shares under the New Repurchase Program.



As of October 2, 2022, we may have to pay contingent consideration related to
acquisitions with open contingency periods of up to $102.1 million. As of
October 2, 2022, we have recorded contingent consideration obligations of $44.6
million, of which $5.3 million was recorded in accrued expenses and other
current liabilities, and $39.3 million was recorded in long-term liabilities.
The expected maximum earnout period for acquisitions with open contingency
periods does not exceed 6.2 years from October 2, 2022, and the remaining
weighted average expected earnout period at October 2, 2022 was 5.1 years.

Distressed global financial markets could adversely impact general economic
conditions by reducing liquidity and credit availability, creating increased
volatility in security prices, widening credit spreads, increasing the cost of
borrowings and decreasing valuations of certain investments. The widening of
credit spreads may create a less favorable environment for certain of our
businesses and may affect the fair value of financial instruments that we issue
or hold. Increases in credit spreads, as well as limitations on the availability
of credit at rates we consider to be reasonable, could affect our ability to
borrow under future potential facilities on a secured or unsecured basis, which
may adversely affect our liquidity and results of operations. In difficult
global financial markets, we may be forced to fund our operations at a higher
cost, or we may be unable to raise as much funding as we need to support our
business activities or fund our strategic transactions.

Our pension plans have not experienced a material impact on liquidity or
counterparty exposure due to the volatility and uncertainty in the credit
markets. During the nine months ended October 2, 2022, we contributed $5.0
million, in the aggregate, to pension plans outside of the United States, and
expect to contribute an additional $1.2 million by the end of fiscal year 2022.
We could potentially have to make additional contributions in future periods for
all pension plans. We expect to use existing cash and external sources to
satisfy future contributions to our pension plans.

Cash Flows
Operating Activities. Net cash provided by continuing operations was $545.3
million for the nine months ended October 2, 2022, as compared to $994.5 million
for the nine months ended October 3, 2021, a decrease of $449.2 million,
primarily due to lower profitability and more cash used in working capital
during the nine months ended October 2, 2022 as compared to the nine months
ended October 3, 2021. The cash provided by operating activities for the nine
months ended October 2, 2022 was principally a result of income from continuing
operations of $415.2 million, and adjustments for non-cash charges aggregating
to $442.5 million, including depreciation and amortization of $322.8 million,
partially offset by net cash usage in working capital of $312.4 million. The
cash provided by operating activities for the nine months ended October 3, 2021
was principally a result of income from continuing operations of $705.3 million,
and adjustments for non-cash charges aggregating to $237.5 million, including
depreciation and amortization of $197.4 million, as well as net cash provided by
working capital of $51.7 million. During the nine months ended October 2, 2022,
we contributed $5.0 million, in the aggregate, to pension plans outside of the
United States.

Investing Activities. Net cash used in investing activities of our continuing
operations was $97.7 million for the nine months ended October 2, 2022, as
compared to $4,044.4 million for the nine months ended October 3, 2021, a
decrease of $3,946.7 million. For the nine months ended October 2, 2022, the net
cash used for capital expenditures and acquisitions were $59.5 million and $7.8
million, respectively, as compared to $59.1 million and $3,967.7 million,
respectively, for the nine months ended October 3, 2021. The capital
expenditures in each period were primarily for manufacturing, software and other
capital equipment purchases. The cash used for acquisitions in fiscal year 2021
primarily included the cash component of the purchase price consideration to
acquire BioLegend, Inc. During the nine months ended October 2, 2022, purchases
of investments were $45.0 million as compared to $19.1 million during the nine
months ended October 3, 2021. The cash used in investing activities during the
nine months ended October 2, 2022 was partially offset by proceeds from
disposition of businesses and assets of $5.7 million during the nine months
ended October 2, 2022, as compared to $1.5 million during the nine months ended
October 3, 2021. In addition, proceeds from notes receivable were $8.9 million
during the nine months ended October 2, 2022.

Financing Activities. Net cash used in financing activities of our continuing
operations was $585.1 million for the nine months ended October 2, 2022, as
compared to net cash provided by financing activities of $3,080.7 million for
the nine months ended October 3, 2021, a decrease in net cash provided by
financing activities of $3,665.8 million. During the nine months ended
October 2, 2022, we made net payments of $508.0 million, as compared to net
borrowings of $3,155.9 million during the nine months ended October 3, 2021. The
changes reflect financing transactions in fiscal year 2021 to finance
acquisitions and to refinance borrowings as compared to our intentions to pay
down debt in fiscal year 2022, which we expect to continue in the fourth quarter
of fiscal year 2022 and throughout fiscal year 2023. During the nine months
ended October 2, 2022, we repurchased shares of our common stock for a total
cost of $56.1 million, as compared to $73.0 million in the prior period. During
the nine months ended October 2, 2022, we paid $26.5 million in dividends as
compared to $23.5 million for the nine months ended October 3, 2021. We paid
$0.8 million in settlement of hedges during the nine months ended October 2,
2022, as compared to $1.5 million for the nine months ended October 3, 2021. The
cash used in financing activities during the nine
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months ended October 2, 2022 was partially offset by proceeds from the issuance
of common stock under our stock plans of $6.3 million during the nine months
ended October 2, 2022, as compared to $22.8 million for the nine months ended
October 3, 2021.

Borrowing Arrangements

During the third quarter of fiscal year 2022, we repaid the remaining $50.0
million of the term loan facility. Since the beginning of the third quarter of
fiscal year 2022, we have repurchased $32.9 million in aggregate principal
amount of our 0.550% senior unsecured notes due in September 2023 (the "2023
Notes") and $20.7 million in aggregate principal amount of our 0.850% senior
unsecured notes due in September 2024 (the "2024 Notes"), and we expect to
continue repurchasing outstanding 2023 Notes and 2024 Notes from time to time,
subject to market conditions. See Note 8, Debt, in the Notes to Condensed
Consolidated Financial Statements and Note 13, Debt, to our audited consolidated
financial statements in the 2021 Form 10-K for a detailed discussion of our
borrowing arrangements.

Dividends



Our Board declared a regular quarterly cash dividend of $0.07 per share for the
first quarter of fiscal year 2022 and in each quarter of fiscal year 2021. At
October 2, 2022, we had accrued $8.8 million for dividends declared on July 22,
2022 for the third quarter of fiscal year 2022 that was paid on November 11,
2022. On October 26, 2022, we announced that our Board had declared a quarterly
dividend of $0.07 per share for the fourth quarter of fiscal year 2022 that will
be payable in February 2023. In the future, our Board may determine to reduce or
eliminate our common stock dividend in order to fund investments for growth,
repurchase shares or conserve capital resources.


Effects of Recently Adopted and Issued Accounting Pronouncements

See Note 1, Nature of Operations and Accounting Policies, to our audited consolidated financial statements in the 2021 Form 10-K for a summary of recently adopted new accounting pronouncements during the fiscal year ended January 2, 2022.



We have not adopted any new accounting pronouncements during the nine months
ended October 2, 2022, and there were no recently issued accounting
pronouncements that are expected to have a significant impact on our financial
statements.

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