Discontinued Operations

12 Months Ended

Dec. 31, 2023

Discontinued Operations and Disposal Groups [Abstract]

As part of the Company’s continuing efforts to focus on higher growth opportunities, the Company has discontinued certain businesses. When the discontinued operations represented a strategic shift that will have a major effect on the Company’s operations and financial statements, the Company has accounted for these businesses as discontinued operations and accordingly, has presented the results of operations and related cash flows as discontinued operations.

On March 13, 2023, the Company completed the previously announced sale of the Business (the “Closing”) to PerkinElmer Topco, L.P. (formerly known as 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”), for an aggregate purchase price of up to $2.45 billion. The Company received approximately $2.13 billion in cash proceeds, before transaction costs and subject to post-closing adjustments. The Company is entitled to an additional $75.0 million in proceeds as consideration for the Company’s ceasing the use of the PerkinElmer brand and related trademarks and transferring them to the Purchaser. This consideration is expected to be received in installments through the first half of 2025. The discounted value of the $75.0 million was measured as $65.2 million and was included in the proceeds. In addition, the Company is entitled to additional consideration of up to $150.0 million that is contingent on the exit valuation the Sponsor and its affiliated funds receive on a sale or other capital events related to the Business. The fair value of this element of consideration was determined to be $15.9 million and was included in the proceeds at Closing. The Company also recorded a receivable, included in Other current assets in the consolidated balance sheets, of approximately $160.2 million as of December 31, 2023 for post-closing adjustments that is expected to be received during fiscal year 2024. The final amount of the receivable related to the post-closing adjustments is subject to change.

The Company has measured the gain on sale and related income tax provision, however, additional adjustments may arise that may impact the final measurement of the gain. The elements of the gain calculation that may result in adjustments include

the measurement of the proceeds, including the settlement of the post-closing adjustments, as well as the related tax effects of such adjustments and the filing of tax returns for the period that includes the sale.

In connection and concurrent with the Closing, the Company has also entered into a Transition Services Agreement (“TSA”) with the Purchaser for a period of up to 24 months from the Closing and a Contract Manufacturing Agreement (“CMA”) for two locations which expired in June 2023. The costs and amounts of reimbursements related to the CMA were not significant. The costs and amounts of reimbursements related to the TSA and other commercial transactions between the parties were not significant in fiscal year 2023 and the amounts in future periods are not expected to be significant.

The Business had been reported in the Company’s Discovery & Analytical Solutions segment, which is now referred to as the Life Sciences segment. The sale of the Business represents a strategic shift that will have a major effect on the Company's operations and financial statements. Accordingly, the Business is reported for all periods as discontinued operations in the Company’s consolidated financial statements. The following table summarizes the results of discontinued operations which are presented as income from discontinued operations in the Company’s consolidated statements of operations:


	December 31, 2023		January 1, 2023		January 2, 2022
	(In thousands)
Revenue	$	176,324	$	1,298,376	$	1,239,361
Cost of revenue	125,219		859,330		822,048
Selling, general and administrative expenses	78,613		306,032		268,760
Research and development expenses	10,434		64,605		74,632
Operating (loss) income	(37,942)		68,409		73,921
Other income:
Gain on sale	811,472		—		—
Other (expense) income, net	(49)		5,195		2,383
Total other income	811,423		5,195		2,383
Income from discontinued operations before income taxes	773,481		73,604		76,304
Provision for income tax	259,890		17,101		22,583
Income from discontinued operations	$	513,591	$	56,503	$	53,721

The table below provides a reconciliation of the carrying amounts of the major classes of assets and liabilities of the discontinued operations to the amounts presented separately in the consolidated balance sheet at January 1, 2023.


	January 1, 2023
	(In thousands)
Cash and cash equivalents	$	14,999
Accounts receivable	343,064
Inventories	210,367
Other current assets	32,063
Total current assets	600,493
Property, plant and equipment, net	60,983
Operating lease right-of-use assets	41,487
Intangible assets, net	202,850
Goodwill	772,812
Other assets, net	15,079
Total long-term assets	1,093,211
Total assets of discontinued operations	$	1,693,704

Accounts payable	29,912
Accrued expenses and other current liabilities	161,260
Total current liabilities	191,172
Deferred taxes and long-term liabilities	46,046
Operating lease liabilities	35,647
Total long-term liabilities	81,693
Total liabilities of discontinued operations	$	272,865

The following operating and investing items from discontinued operations were as follows for the fiscal years ended:


	December 31, 2023		January 1, 2023		January 2, 2022
	(In thousands)
Depreciation	$	—	$	8,011	$	12,897
Amortization	—		16,984		33,664
Capital expenditures	1,292		10,670		13,868