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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_____________________________________
Form 10-K
(Mark One)
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 30, 2012
or
o
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)
(Registrant’s telephone number, including area code): (781) 663-6900
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Name of Each Exchange on Which Registered
Common Stock, $1 Par Value
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ        No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o  No þ
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or Section 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 þ         No o
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 þ         No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.         þ
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  þ
 
Accelerated filer  o
 
Non-accelerated filer  o
 
Smaller reporting company  o
 
 
 
 
(Do not check if a 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 o    No þ
The aggregate market value of the common stock, $1 par value per share, held by non-affiliates of the registrant on June 29, 2012 , was $2,914,063,957 based upon the last reported sale of $25.80 per share of common stock on June 29, 2012 .
As of February 22, 2013 , there were outstanding 113,733,875 shares of common stock, $1 par value per share.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of PerkinElmer, Inc.’s Definitive Proxy Statement for its Annual Meeting of Shareholders to be held on April 23, 2013 are incorporated by reference into Part III of this Form 10-K.
 

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TABLE OF CONTENTS
 
 
 
Page
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
 
 
 
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
 
 
 
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
 
 
 
PART IV
Item 15.

 

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PART I

Item 1.
Business
 
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 are a Massachusetts corporation, founded in 1947. Our headquarters are in Waltham, Massachusetts, and we market our products and services in more than 150 countries. As of December 30, 2012 , we employed approximately 7,500 employees in our continuing operations. Our common stock is listed on the New York Stock Exchange under the symbol “PKI” and we are a component of the S&P 500 Index.
 
We maintain a website with the address http://www.perkinelmer.com . We are not including the information contained in our website as part of, or incorporating it by reference into, this annual report on Form 10-K. We make available free of charge through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports, as soon as reasonably practicable after we electronically file these materials with, or otherwise furnish them to, the Securities and Exchange Commission.
 
Our Strategy
Our strategy is to provide innovative products, services and solutions that drive scientific enhancements and productivity improvements in targeted high growth market segments and to develop value-added applications and solutions to foster further development and expansion of the markets we serve. To execute on our strategy and drive higher revenue growth, we focus on broadening our product and service offerings through the acquisition of innovative technology and expenditures for research and development. Our strategy includes:
•
Achieving significant growth in both of our core business segments, Human Health and Environmental Health, through strategic acquisitions and licensing;
•
Accelerating innovation through both internal research and development and third-party collaborations and alliances;
•
Strengthening our position within key markets, by expanding our product and service offerings and maintaining superior product quality;
•
Utilizing our share repurchase programs to help drive shareholder value; and
•
Attracting, retaining and developing talented and engaged employees.

Recent Developments
As part of our strategy to grow our core businesses, we have recently taken the following actions:

Strategic Business Re-Alignment:
We announced a new alignment of our businesses effective for fiscal year 2013 that will allow us to implement our strategy and propel our vision to improve global health by innovating technologies that help make healthcare more effective, affordable and accessible around the world. Our field service for products previously sold by our former Bio-discovery business, as well as our Informatics business, will be moved from our Environmental Health segment into our Human Health segment. We will report our financial results beginning in fiscal year 2013 using this new alignment under our Human Health and Environmental Health segments.

Business Combination:
Acquisition of Haoyuan Biotech Co., Ltd.  In November 2012, we acquired all outstanding stock of Shanghai Haoyuan Biotech Co., Ltd. ("Haoyuan"). Haoyuan is a provider of nucleic acid-based blood screening solutions for the blood banking and clinical diagnostics markets. We expect this acquisition to extend our capabilities into nucleic acid blood screening, as well as deepen our position in the growing molecular clinical diagnostics market in China. We paid the shareholders of Haoyuan $38.0 million in cash for the stock of Haoyuan. We recorded a receivable of $2.7 million from the shareholders of Haoyuan as a reduction of purchase price for the settlement of certain contingencies. As of the closing date, we potentially had to pay the shareholders additional contingent consideration of up to $30.0 million , which at closing had an estimated fair value of $1.9 million . We reported the operations for this acquisition within the results of our Human Health segment from the acquisition date.


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Restructuring:
During fiscal year 2012 , we recorded a $16.8 million pre-tax restructuring charge in our Human Health segment related to a workforce reduction from reorganization activities, the closure of excess facility space, and contract termination costs. We also recognized a $7.4 million pre-tax restructuring charge in our Environmental Health segment related to a workforce reduction from reorganization activities and contract termination costs. Our management approved these plans principally to shift resources to higher growth geographic regions and end markets, to realign operations and production resources as a result of recent acquisitions and to shift resources to a newly established shared service center. We also recorded an additional pre-tax restructuring charge of $0.3 million primarily related to higher than expected costs associated with workforce reductions in Europe within the Human Health segment, as well as an additional reversal of $0.9 million primarily related to a reduction in the estimated sublease rental payments reasonably expected to be obtained for an excess facility in Europe within the Environmental Health segment. We also recorded a pre-tax charge of $1.5 million during fiscal year 2012 primarily as a result of terminating various contractual commitments in connection with certain disposal activities in our Environmental Health segment. The pre-tax restructuring activity associated with these plans has been reported as restructuring expenses and is included as a component of operating expenses from continuing operations. We expect the impact of immediate cost savings from these restructuring plans on operating results and cash flows to approximately offset the increased spending required to realign operations. We expect the impact of future cost savings from these restructuring activities on operating results and cash flows will exceed $11.0 million on an annual basis beginning in fiscal year 2014, primarily as decreases to cost of revenue and selling, general and administrative expenses.
 
As part of our ongoing business strategy, we also took the following action:

Share Repurchase Program:
On October 23, 2008, we announced that our Board of Directors (our "Board") authorized us to repurchase up to 10.0 million shares of common stock under a stock repurchase program (the “Repurchase Program”). On August 31, 2010, we announced that our Board had authorized us to repurchase an additional 5.0 million shares of common stock under the Repurchase Program. The Repurchase Program expired on October 22, 2012. On October 24, 2012, our Board authorized us to repurchase up to 6.0 million shares of common stock under a new stock repurchase program (the "New Repurchase Program"). The New Repurchase Program will expire on October 24, 2014 unless terminated earlier by our Board, and may be suspended or discontinued at any time. During fiscal year 2012 , we did not repurchase any shares of common stock under either of the stock repurchase programs. During fiscal year 2011 , we repurchased approximately 4.0 million shares of common stock in the open market at an aggregate cost of $107.8 million , including commissions, under the Repurchase Program. During fiscal year 2010 , we repurchased approximately 3.0 million shares of common stock in the open market at an aggregate cost of $71.5 million , including commissions, under the Repurchase Program. As of December 30, 2012 , all 6.0 million shares authorized by our Board under the New Repurchase Program remained available for repurchase. From December 31, 2012 through February 22, 2013 , we repurchased approximately 2.6 million shares of common stock in the open market at an aggregate cost of $89.0 million , including commissions, under the New Repurchase Program.
 
Business Segments and Products
We report our business in two segments: Human Health and Environmental Health. We performed our annual impairment testing on January 2, 2012 , the annual impairment date for our reporting units, and based on the first step of the impairment process (the comparison of the fair value to the carrying value of the reporting unit to determine if the carrying value exceeds the fair value), we concluded that there was no goodwill impairment.
 
We announced a new alignment of our businesses effective for fiscal year 2013 that will allow us to implement our strategy and propel our vision to improve global health by innovating technologies that help make healthcare more effective, affordable and accessible around the world. Our field service for products previously sold by our former Bio-discovery business, as well as our Informatics business, will be moved from our Environmental Health segment into our Human Health segment. We will report our financial results beginning in fiscal year 2013 using this new alignment under our Human Health and Environmental Health segments.

Human Health Segment
Our Human Health segment 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. Within the Human Health segment, we serve both the diagnostics and research markets. Our Human Health segment generated revenue of $1,044.1 million in fiscal year 2012 .
 

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Diagnostics Market:
We provide early detection for genetic disorders from pre-conception to early childhood, as well as digital x-ray flat panel detectors and infectious disease testing for the diagnostics market. Our screening products are designed to provide early and accurate insights into the health of expectant mothers during pregnancy and into the health of their newborns. Our instruments, reagents and software test and screen for disorders and diseases, including Down syndrome, infertility, anemia and diabetes. Our digital x-ray flat panel detectors are used by physicians to make fast and accurate diagnoses of conditions ranging from broken bones to reduced blood flow in vascular systems. In addition, our digital x-ray flat panel detectors improve oncology treatments by focusing radiation directly at tumors.
 
Research Market:
In the research market, we provide a broad suite of solutions including reagents, liquid handling and detection and imaging technologies that enable researchers to improve the drug discovery process. These products, solutions and services enable pharmaceutical companies to create better therapeutics by helping to bring products to market faster and more efficiently. Our research portfolio includes a wide range of systems consisting of instrumentation for automation and detection solutions, in vitro and in vivo imaging and analysis hardware and software, and a portfolio of consumable products, including drug discovery and research reagents. We sell our research solutions to pharmaceutical, biotechnology and academic research customers globally.
 
Principal Products:
Our principal products for Human Health applications include the following:
 
Diagnostics:
•
The DELFIA ® Xpress screening platform, which is a complete solution for prenatal screening, and includes a fast, continuous loading system supported by kits for both first and second trimester analyses, and clinically validated LifeCycle™ software. A Placental Growth Factor assay is used to screen pregnant women for early-onset pre-eclampsia.
•
The NeoGram™ MS/MS AAAC in vitro diagnostic kit, which is used to support detection of metabolic disorders in newborns by tandem mass spectrometry.
•
The First Trimester Screen | Fß screening protocol, which is used to provide a first trimester prenatal aneuploidy screening service by combining ultrasound measurement of the fluid accumulation behind the neck of the fetus with maternal serum markers. It is designed to assess patient-specific risk for fetal Down syndrome, trisomy 18 and trisomy 13.
•
The GSP ® Neonatal hTSH, 17µ-OHP, GALT and IRT kits, which are used for screening congenital neonatal conditions from a drop of blood.
•
The NeoBase Non-derivatized MS/MS kit, which analyzes newborn blood samples for measurement of amino acids and analytes for specific diseases.
•
Amorphous silicon digital x-ray flat panel detectors, which contain an enabling technology for digital x-ray imaging that replaces film and produces improved image resolution and diagnostic capability in applications such as radiography, cardiology, angiography and cancer treatments.
•
The prenatal BACs-on-Beads™ ("BoBs™") in vitro diagnostic (“IVD”) assay for rapid prenatal testing of multiple genetic diseases and chromosomal abnormalities, for use in the European Union, which is the first IVD product from the BoBs™ proprietary multiplexed bead-based technology product family.
•
Umbilical cord tissue stem cell banking services from ViaCord ® for the banking of stem cells harvested from umbilical cord tissue for potential therapeutic application.
•
Prenatal and newborn tests including the Signature Precision Panel™ which is used to rapidly screen for aneuploidies of chromosomes 13, 18, 21, X and Y, as well as 20 severe microdeletion/duplication syndromes during pregnancy. Our newborn testing and diagnostics portfolio was also expanded to include a panel to screen for six Lysosomal Storage Disorders. The panel tests for Krabbe disease, Gaucher's disease, Niemann-Pick disease (Type A and Type B), Pompe disease, Fabry disease and MPS 1.
•
Oncology testing services utilizing OncoChip™ microarray technology for early diagnoses of hematological malignancies.
•
The new XRD 0822 and XRD 1622 digital x-ray flat panel detectors, which provide non-destructive testing applications including pipeline inspection, manufacturing inspection, PCB inspection and 3D Cone Beam CT.

Research:
•
Radiometric detection solutions, including over 1,100 NEN ® radiochemicals, the Tri-carb ® and MicroBeta 2® families of liquid scintillation counters, which are used for beta, gamma and luminescence counting in microplate formats, are utilized in research, environmental and drug discovery applications.

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•
The Opera ® high content screening system and Operetta ® high content imaging system, which are used to automate imaging and analysis for cell-based assays for drug discovery and basic cellular science research laboratories.
•
The Columbus™ image data storage and analysis system, which provides a single solution to the storage and analysis of high content data from any major high content screening system used to visualize and analyze high content images via the Internet.
•
The Ultra VIEW ® VoX 3D live cell imaging system, which is a high-resolution, high speed, confocal imaging system that allows for the observation and measurement of cellular and molecular processes in real time. Volocity ® 6.0 3D image analysis software allows scientists to understand intracellular and intercellular relationships for 3D data visualization, publication, restoration and analysis of images from a range of fluorescence microscopy and high content image systems.
•
The EnVision ® Multilabel Plate Reader and EnSpire ® Multimode Plate Reader, which are used in a wide range of high-throughput screening applications, including those utilizing AlphaLISA ® and/or AlphaScreen ® technology. The EnSpire reader has the option of Corning ® Epic ® label-free technology providing more physiologically relevant data for the identification of new therapeutic targets.
•
A wide range of homogeneous biochemical and cellular assay reagents, including LANCE ® Ultra and Alpha Technology assay platforms, which are used for the drug discovery targets such as G-protein coupled receptors (“GPCR”), kinases, antibodies and epigenetic modification enzymes. A broad portfolio of recombinant GPCR and Ion Channel cell lines, including over 300 products and 120 ready-to-use frozen cell lines for a wide range of disease areas. The AlphaLISA ® research assays, including over 100 no-wash biomarker kits for both biotherapeutics and small molecule development in a variety of therapeutic areas including cancer, neurodegeneration, and virology.
•
TSA™ Plus biotin kits that can increase sensitivity of histochemistry and cytochemistry as much as 10 to 20 times.
•
In vivo imaging technologies including the IVIS ® Spectrum Series, a pre-clinical optical imaging platform combining high throughput and full tomographic imaging to facilitate non-invasive longitudinal monitoring of disease progression, cell trafficking and gene expression patterns in living animals and the Quantum FX microCT designed for longitudinal imaging with optical co-registration enablement. The Quantum FXuCT features ultra-fast imaging for ultimate throughput while maintaining low dose and high quality images for parametric analysis. Additionally, a broad portfolio of fluorescent and bioluminescent in vivo imaging reagents provides quantitative imaging data that can be useful for identifying and characterizing a range of disease biomarkers and therapeutic efficacy in living animal models. The HypoxiSense™ Fluorescent Pre-clinical Imaging Agent is used to detect hypoxia to assess the therapeutic efficacy in drug screening of tumor models and fluorescence microscopy of disease tissues.
•
The MultiSpecies Imaging Module for the Fluorescence Molecular Tomography Quantitative Pre-clinical Imaging Systems, which enables researchers to generate 3D in vivo animal models relevant to disease research.
•
LapChip ® for molecular diagnostics in clinical research laboratories, which uses microfluidic technology to perform reproducible, high-resolution, electrophoretic separations for analyzing multiplex polymerase chain reaction products for molecular biology applications.
•
Next generation sequencing tools including chemagen kits for nucleic acid separation, LabChip fractionation and separation systems, automated liquid handling workstations, the Ion PGM™ Sequencer and Geospiza ® data analysis program.
•
A wide reagent portfolio including the HCA ImagAmp™ reagent kit for high content screening and cellular analysis applications, which is used in a variety of research areas including cell differentiation, cell toxicity, programmed cell death, drug discovery, protein expression and signaling pathway analysis, as well as an expanded epigenetic detection reagents portfolio specifically validated for drug discovery and life sciences research now covering nine different histone marks, as well as p53, with more than 15 validated in vitro and cell-based assays to help researchers discover novel drug compounds directed against several epigenetic targets.
•
The Vectra™ 2 automated slide imaging system, which is an integrated solution to advance the identification and validation of new drug targets to improve the assessment of drug response.
•
Western Lighting ECL Pro, a non-radioactive light-emitting system, which detects proteins immobilized on a membrane in Western blots.
•
Automated workstations including the JANUS ® Automated Workstation, an automation and liquid handling system, designed for the efficient automation of sample preparation procedures utilized in pharmaceutical, biotech, and research applications. The cell::explorer™ and plate::handler™ automated workstations allow integration of multiple laboratory instrumentation using a centralized robotic interface, allowing higher throughput and turnkey-application focused solutions.


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New Products:
Significant new products introduced or acquired for Human Health applications in fiscal year 2012 include the following:
 
Diagnostics:
•
An expanded portfolio of molecular infectious disease screening technologies for blood bank and clinical laboratory settings in China. The tools include a qualitative 3-in-1 assay for the detection of hepatitis B, hepatitis C and HIV, and assays for chlamydia trachomatis and neisseria gonorrhoeae.  
 
Research:
•
Geospiza GeneSifter ® Analysis Edition, an integrated informatics platform for the visualization and analysis from sample to results of microarray and next generation sequencing data.
•
Expanded assay kits utilizing AlphaLISA ® Technology used for safety testing, manufacturing and quality control of biotherapeutic drugs.
•
HER2Sense™ preclinical imaging agent, supporting breast cancer discovery research, which is the first fluorescent, discovery research imaging agent to be based on a commercial therapeutic antibody.
•
Updated inForm ® Image Analysis Software, enabling automated image analysis for accurately quantifying biomarker expression in tumors and surrounding tissues.
•
BacteriSense™ 645 Targeted Fluorescent Imaging Agent, which is used to target infection of both gram-negative and gram-positive bacteria.
•
FolateRSense™ 680 Targeted Fluoresent Imaging Agent, which is used to closely monitor and quantitate tumor growth and metabolism
•
BombesinRSense 680 Targeted Fluorescent Imaging Agent, which is specific for bombesin receptors expressed in many types of cancer.
•
VivoTag™ 680XL Protein Labeling Kit, which helps to prepare fluorescently labeled antibodies, proteins or peptides for small animal in vivo imaging applications.
 
Brand Names:
Our Human Health segment offers additional products under various brand names, including AlphaLISA ® , AlphaScreen ® , AutoDELFIA ® , Columbus™, EnSpire ® , EnVision ® , Evolution™, FMT ® , Genoglyphix ® , Geospiza ® , inForm™, IVIS ® , LabChip ® , LANCE ® , LifeCycle™, Living Image ® , MultiPROBE ® , NEN ® , NTD Labs ® , Nuance ® , Oncoglyphix™, Opera ® , Operetta ® , Pannoramic™, Quantum™, Elsevier's Reaxys ® , ScanArray™, Signature Genomics ® , Signature PrenatalChip®, Signature Precision Panel™, SignatureChip ® , Specimen Gate™, TRIO™, Twister ® , Ultra VIEW ® VoX, VariSpec™, Vectra ® , ViaCord ® , VICTOR™, ViewLux ® , VivoTag™, Volocity ® , Wizard ® , and XRD amorphous silicon FPDs™.
 
Environmental Health Segment
Our Environmental Health segment 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. Our Environmental Health segment generated revenue of $1,071.1 million in fiscal year 2012 .
 
Environmental Market:
For the environmental market, we provide analytical products, services and solutions that address the quality of our environment, sustainable energy development, and help ensure safer food and consumer products.
 
Our technologies are used to detect and help reduce the impact products and industrial processes may have on our environment. For example, our water quality solutions help ensure the purity of the world's water supply by detecting harmful substances, such as trace metal, organic, pesticide, chemical and radioactive contaminants.
 
We provide a variety of solutions that detect the presence of potentially dangerous materials, including lead and phthalates, in toys and other consumer products to help ensure their safety for use or consumption. Our solutions are also used to identify and prevent counterfeiting of medicine and other goods. Our methods and analyses are transferable throughout the supply chain so our customers are able to keep pace with industry standards as well as governmental regulations and certifications.
 
Industrial Market:
We provide analytical instrumentation for the industrial market which includes the semiconductor, chemical, petrochemical, lubricant, construction, office equipment and quality assurance industries.
 

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Laboratory Services Market:
We have approximately 1,400 service engineers to support our customers throughout the world and to help them improve the productivity of their labs. Our OneSource ® service business strategy is aligned with customers' needs to consolidate laboratory services in order to gain efficiencies within their labs.
 
Principal Products:
Our principal products for Environmental Health applications include the following:
•
The Clarus ® series of gas chromatographs, gas chromatographs/mass spectrometers and the TurboMatrix™ family of sample-handling equipment, which are used to identify and quantify compounds in the environmental, forensics, food and beverage, hydrocarbon processing/biofuels, materials testing, pharmaceutical and semiconductor industries.
•
The Flexar™ series of liquid chromatography and mass spectrometry instruments, which are controlled by the Chromera ® chromatography data system and incorporates an ergonomic industrial design to deliver a wide range of pressure and detector options to address the application needs of high pressure liquid chromatography laboratories. These systems are used to identify and quantify compounds for applications in the environmental, food, beverage, and pharmaceutical industries.
•
The AxION™ 2 TOF MS platform, which helps companies deliver quality products and services to consumers across the environmental, food and pharmaceutical sectors and is used for the identification of unexpected compounds in samples, providing a high level of resolution and mass accuracy.
•
Our atomic spectroscopy family of instruments, including the AAnalyst™/PinAAcle™ series of atomic absorption spectrometers, the Optima™ family of inductively coupled plasma (“ICP”) optical emission spectrometers and the NexION ® family of ICP mass spectrometers, which are used in the environmental and chemical industries, among others, to determine the elemental content of a sample.
•
Our infrared spectroscopy family, including the Spectrum Two™ spectrometer, a compact and portable instrument which is used for high-speed infrared analysis for unknown substance identification, material qualification or concentration determination in fuel and lubricant analysis, polymer analysis and pharmaceutical and environmental applications, and the Frontier™ spectrometer, which is designed to provide high sensitivity and performance for safe drug development and for determining chemical and material properties in a variety of samples, including consumer products.
•
The LAMBDA™ UV/Vis series, which is used to measure liquids, solids, pastes and powder samples and for regulatory tests requiring variable bandwidths.
•
The DSC 8000 and 8500, which feature a second generation, power controlled double furnace designed to provide fast heating and cooling rates required to accurately understand how materials behave under different conditions.
•
The DMA 8000, a thermal analysis system, which is used by scientists in the polymers, composites, pharmaceutical, and food and beverage industries for applications ranging from simple quality control to advanced research.
•
The Porcine Detection Kits for the Halal food certification industry, which are used to detect porcine meat traces in order to provide authenticity of food products where Halal certification is required.
•
OneSource ® Laboratory services made up of a comprehensive portfolio of multivendor instrument management, QA/QC, lab relocation and regulatory compliance services. OneSource programs are tailored to the specific needs and goals of individual customers.

New Products:
New products introduced or acquired for Environmental Health applications in fiscal year 2012 include the following:
•
The OilExpress™ 4 Oil Condition Monitoring Systems, which combine the high-performance Spectrum Two™ FT-IR spectrometer with an OilPrep™ oil dilution system to quickly analyze contaminants in oil.
•
The TL-9000, which is a hyphenated thermal analysis solution combining thermogravimetric analysis and transfers sequentially to both a Fourier Transform Infrared Spectrometer and Mass Spectrometer or Gas Chromatography/Mass Spectrometer.
•
The Simultaneous Thermal Analyzer 8000, which delivers high performance thermal analysis and is used for compositional analysis and kinetic studies.
•
The AxION ® Direct Sample Analysis system, which is an instrument that eliminates sample preparation steps and the need for front-end gas or liquid chromatography separation for direct sample introduction to a mass spectrometer.
•
OneSource ® Scientific IT Solutions, which is a series of informatics-based consulting, planning and management offerings to assist in laboratory productivity.
•
Supra-d™ QuEChERS Dispersive Solid Phase Extraction solution for sample preparation in pesticide residue analysis to test the safety of fruit and vegetables.

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•
AxION ® eDoor™, which is a multi-vendor, web-based open access software that is designed to help manage multiple locations, chemists, instrument types and applications and includes “walk up” sample introduction with results delivered via Web, email and PDA.
•
Informatics platforms including Ensemble for Chemistry™, Ensemble for Biology™, Ensemble ® for QA/QC ChemDraw ® and ChemBioOffice ® which are integrated suites that focus on the complex and varied needs of understanding and managing data for productivity and collaboration.
•
The Search Genius™ application, which is used by researchers as a single software system to search, save and share unstructured data stored throughout an organization for managing workflow.
•
Asset Genius™, an informatics- based business intelligence solution which assists laboratories in deploying, utilizing and managing laboratory assets throughout their lifecycle.
•
Licensing for the exclusive, worldwide rights to the TIBCO Spotfire ® software platform in certain scientific research and development markets through an exclusive strategic relationship with TIBCO Software, Inc.

Brand Names:
Our Environmental Health segment offers additional products under various brand names, including Asset Genius™, AxION™, ChemBioOffice ® , ChemDraw ® , Chromera™, Ensemble ® for Biology, Ensemble ® for Chemistry, Flexar™, Frontier™, HyperDSC ® , LAMBDA™, LABWORKS™, NexION ® , OilExpress™, OilPrep™, OneSource ® , Optima™, Search Genius™, Spectrum™, Supra-d™, SureFire ® , and TIBCO Spotfire ® .
 
Marketing
All of our businesses market their products and services directly through their own specialized sales forces. As of December 30, 2012 , we employed approximately 3,500 sales and service representatives operating in approximately 33 countries and marketing products and services in more than 150 countries. In geographic regions where we do not have a sales and service presence, we utilize distributors to sell our products.
 
Raw Materials, Key Components and Supplies
Each of our businesses uses a wide variety of raw materials, key components and supplies that are generally available from alternate sources of supply and in adequate quantities from domestic and foreign sources. We generally have multi-year contracts, with no minimum purchase requirements, with certain of our suppliers. For certain critical raw materials, key components and supplies required for the production of some of our principal products, we have qualified only a limited or a single source of supply. We periodically purchase quantities of some of these critical raw materials in excess of current requirements, in anticipation of future manufacturing needs. With sufficient lead times, we believe we would be able to qualify alternative suppliers for each of these raw materials and key components. See the applicable risk factor in “Item 1A. Risk Factors” for an additional description of this risk.
 
Intellectual Property
We own numerous United States and foreign patents and have patent applications pending in the United States and abroad. We also license intellectual property rights to and from third parties, some of which bear royalties and are terminable in specified circumstances. In addition to our patent portfolio, we possess a wide array of unpatented proprietary technology and know-how. We also own numerous United States and foreign trademarks and trade names for a variety of our product names, and have applications for the registration of trademarks and trade names pending in the United States and abroad. We believe that patents and other proprietary rights are important to the development of both of our reporting segments, but we also rely upon trade secrets, know-how, continuing technological innovations and licensing opportunities to develop and maintain the competitive position of both of our reporting segments. We do not believe that the loss of any one patent or other proprietary right would have a material adverse effect on our overall business or on any of our reporting segments.
 
In some cases, we may participate in litigation or other proceedings to defend against or assert claims of infringement, to enforce our patents or our licensors’ patents, to protect our trade secrets, know-how or other intellectual property rights, or to determine the scope and validity of our or third parties’ intellectual property rights. Litigation of this type could result in substantial cost to us and diversion of our resources. An adverse outcome in any litigation or proceeding could subject us to significant liabilities or expenses, require us to cease using disputed intellectual property or cease the sale of a product, or require us to license the disputed intellectual property from third parties. We are currently involved in a lawsuit involving claims of violation of intellectual property rights. See “Item 3. Legal Proceedings” for a discussion of this matter.
 
Backlog
We believe that backlog is not a meaningful indicator of future business prospects for either of our business segments due to the short lead time required on a majority of our sales. Therefore, we believe that backlog information is not material to an understanding of our business.
 

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Competition
Due to the wide range of our products and services, we face many different types of competition and competitors. This affects our ability to sell our products and services and the prices at which these products and services are sold. Our competitors range from large foreign and domestic organizations, which produce a comprehensive array of goods and services and that may have greater financial and other resources than we do, to small firms producing a limited number of goods or services for specialized market segments.
 
We compete on the basis of service level, price, technological innovation, operational efficiency, product differentiation, product availability, quality and reliability. Competitors range from multinational organizations with a wide range of products to specialized firms that in some cases have well-established market niches. We expect the proportion of large competitors to increase through the continued consolidation of competitors.
 
We believe we compete effectively in each of the areas in which our businesses experience competition.
 
Research and Development
Research and development expenditures were approximately $132.6 million during fiscal year 2012 , approximately $115.8 million during fiscal year 2011 , and approximately $94.8 million during fiscal year 2010 .
 
We directed our research and development efforts in fiscal years 2012, 2011, and 2010 primarily toward the diagnostics and research markets within our Human Health segment, and the environmental, industrial and laboratory services markets within our Environmental Health segment, in order to help accelerate our growth initiatives. We expect to continue our strong investments in research and development to drive growth during fiscal year 2013 , and to continue to emphasize the diagnostics and research markets within our Human Health segment, and the environmental, industrial and laboratory services markets within our Environmental Health segment.

Environmental Matters
Our operations are subject to various foreign, federal, state and local environmental and safety laws and regulations. These requirements include those governing uses, emissions and discharges of hazardous substances, the remediation of contaminated soil and groundwater, the regulation of radioactive materials, and the health and safety of our employees.
 
We may have liability under the Comprehensive Environmental Response Compensation and Liability Act and comparable state statutes that impose liability for investigation and remediation of contamination without regard to fault, in connection with materials that we or our former businesses sent to various third-party sites. We have incurred, and expect to incur, costs pursuant to these statutes.
 
We are conducting a number of environmental investigations and remedial actions at our current and former locations and, along with other companies, have been named a potentially responsible party (“PRP”) for certain waste disposal sites. We accrue for environmental issues in the accounting period that our responsibility is established and when the cost can be reasonably estimated. We have accrued $6.1 million as of December 30, 2012 , which represents our management’s estimate of the total cost of the ultimate remediation of known environmental matters and does not include any potential liability for related personal injury or property damage claims. This amount is not discounted and does not reflect the recovery of any amounts through insurance or indemnification arrangements. These 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 we have been named a PRP, our management does not currently anticipate any additional liability to result from the inability of other significant named parties to contribute. We expect 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 our consolidated financial statements. While it is possible that a loss exceeding the amounts recorded in the consolidated financial statements may be incurred, the potential exposure is not expected to be materially different from those amounts recorded.
 
In addition, during the second quarter of fiscal year 2007, we settled an insurance claim resulting from a fire that occurred at our facility in Boston, Massachusetts in March 2005. In fiscal year 2007, we accrued $9.7 million representing our management’s estimate of the total cost for decommissioning the building, including environmental matters, which was damaged in the fire. We paid $2.5 million during fiscal year 2009, $1.6 million during fiscal year 2008 and $3.9 million during fiscal year 2007 towards decommissioning the building. We sold the building on April 27, 2010. Net proceeds from the sale were $11.0 million , and we recorded a pre-tax gain of $3.4 million in operating income.
 

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We may become subject to new or unforeseen environmental costs or liabilities. Compliance with new or more stringent laws or regulations, stricter interpretations of existing laws, or the discovery of new contamination could cause us to incur additional costs.
 
Employees
As of December 30, 2012 , we employed approximately 7,500 employees in our continuing operations. Several of our subsidiaries are parties to contracts with labor unions and workers’ councils. As of December 30, 2012 , we estimate that we employed an aggregate of approximately 1,600 union and workers’ council employees. We consider our relations with employees to be satisfactory.

Financial Information About Reporting Segments
We have included the expenses for our corporate headquarters, such as legal, tax, audit, human resources, information technology, and other management and compliance costs, as well as the expense related to mark-to-market on postretirement benefit plans, as “Corporate” below. We have 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 our 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 our reporting segments.
 
The table below sets forth revenue and operating income (loss), excluding discontinued operations, by reporting segment for the fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
 
 
(As adjusted)
 
(In thousands)
Human Health
 
 
 
 
 
Product revenue
$
888,006

 
$
754,046

 
$
672,217

Service revenue
156,128

 
130,361

 
121,514

Total revenue
1,044,134

 
884,407

 
793,731

Operating income from continuing operations (1)
73,727

 
99,306

 
97,855

Environmental Health
 
 
 
 
 
Product revenue
586,668

 
565,464

 
489,525

Service revenue
484,403

 
468,637

 
418,511

Total revenue
1,071,071

 
1,034,101

 
908,036

Operating income from continuing operations (1)
97,313

 
99,341

 
95,090

Corporate
 
 
 
 
 
Operating loss from continuing operations (2)
(72,497
)
 
(107,519
)
 
(35,377
)
Continuing Operations
 
 
 
 
 
Product revenue
$
1,474,674

 
$
1,319,510

 
$
1,161,742

Service revenue
640,531

 
598,998

 
540,025

Total revenue
2,115,205

 
1,918,508

 
1,701,767

Operating income from continuing operations
98,543

 
91,128

 
157,568

Interest and other expense (income), net
47,956

 
26,774

 
(8,383
)
Income from continuing operations before income taxes
$
50,587

 
$
64,354

 
$
165,951

____________________________
(1)  
The pre-tax impairment charges have been included in the Human Health and Environmental Health operating income from continuing operations. We recognized $54.3 million of pre-tax impairment charges in the Human Health segment and also recognized $19.9 million of pre-tax impairment charges in the Environmental Health segment in fiscal year 2012 . We recognized a $3.0 million pre-tax impairment charge in the Human Health segment in fiscal year 2011 . There were no impairment charges during fiscal year 2010 .
 
(2)  
The expenses related to mark-to-market on postretirement benefit plans have been included in the Corporate operating loss from continuing operations, and together constituted a pre-tax loss of $31.8 million in fiscal year 2012 , a pre-tax loss of $67.9 million in fiscal year 2011 , and a pre-tax loss of $0.2 million in fiscal year 2010 .


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Additional information relating to our reporting segments is as follows for the fiscal years ended:
 
 
Depreciation and Amortization
Expense
 
Capital Expenditures
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
 
(In thousands)
Human Health
$
86,703

 
$
69,746

 
$
61,346

 
$
22,515

 
$
15,395

 
$
17,341

Environmental Health
37,634

 
39,480

 
26,284

 
16,498

 
13,190

 
15,005

Corporate
2,528

 
1,695

 
1,533

 
3,395

 
2,007

 
1,300

Continuing operations
$
126,865

 
$
110,921

 
$
89,163

 
$
42,408

 
$
30,592

 
$
33,646

Discontinued operations
$
—

 
$
—

 
$
10,177

 
$
—

 
$
—

 
$
9,090

 
 
Total Assets
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
 
 
(As adjusted)
 
 
 
(In thousands)
Human Health
$
2,246,389

 
$
2,254,768

 
$
1,772,524

Environmental Health
1,621,421

 
1,569,490

 
1,375,992

Corporate
33,952

 
31,181

 
60,203

Net current and long-term assets of discontinued operations
—

 
202

 
227

Total assets
$
3,901,762

 
$
3,855,641

 
$
3,208,946


Financial Information About Geographic Areas
Both of our reporting segments conduct business in, and derive substantial revenue from, various countries outside the United States. During fiscal year 2012 , we had $1,292.3 million in sales from our international operations, representing approximately 60% of our total sales. During fiscal year 2012 , we derived approximately 41% of our international sales from our Human Health segment, and approximately 59% of our international sales from our Environmental Health segment. We anticipate that sales from international operations will continue to represent a substantial portion of our total sales in the future.
 
We are exposed to the risks associated with international operations, including exchange rate fluctuations, regional and country-specific political and economic conditions, foreign receivables collection concerns, trade protection measures and import or export licensing requirements, tax risks, staffing and labor law concerns, intellectual property protection risks, and differing regulatory requirements. Additional geographic information is discussed in Note 23 to our consolidated financial statements included in this annual report on Form 10-K.
 
Item 1A.
Risk Factors
The following important factors affect our business and operations generally or affect multiple segments of our business and operations:
If the markets into which we sell our products decline or do not grow as anticipated due to a decline in general economic conditions, or there are uncertainties surrounding the approval of government or industrial funding proposals, or there are unfavorable changes in government regulations, we may see an adverse effect on the results of our business operations.
Our customers include pharmaceutical and biotechnology companies, laboratories, academic and research institutions, public health authorities, private healthcare organizations, doctors and government agencies. Our quarterly revenue and results of operations are highly dependent on the volume and timing of orders received during the quarter. In addition, our revenues and earnings forecasts for future quarters are often based on the expected trends in our markets. However, the markets we serve do not always experience the trends that we may expect. Negative fluctuations in our customers’ markets, the inability of our customers to secure credit or funding, restrictions in capital expenditures, general economic conditions, cuts in government funding or unfavorable changes in government regulations would likely result in a reduction in demand for our products and services. In addition, government funding is subject to economic conditions and the political process, which is inherently fluid and unpredictable. Our revenues may be adversely affected if our customers delay or reduce purchases as a result of uncertainties surrounding the approval of government or industrial funding proposals. Such declines could harm our

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consolidated financial position, results of operations, cash flows and trading price of our common stock, and could limit our ability to sustain profitability.
Our growth is subject to global economic and political conditions, and operational disruptions at our facilities.
We have operations in many parts of the world. While the global economy began showing signs of gradual improvement in 2010 from its significant downturn in 2008 and 2009, debt and equity markets experienced renewed disruption beginning early in the third quarter of 2011, including the downgrading of government issued debt in the United States and other countries, and the prospects of an economic recovery remain uncertain particularly as the United States and other countries continue to balance concerns around debt, inflation, growth and budget allocations in their policy initiatives. There can be no assurance that any of the recent economic improvements will be sustainable, or that we will not experience any adverse effects that may be material to our consolidated cash flows, results of operations, financial position or our ability to access capital. Our business is also affected by local economic environments, including inflation, recession, financial liquidity and currency volatility or devaluation. Political changes, some of which may be disruptive, could interfere with our supply chain, our customers and all of our activities in a particular location.
While we take precautions to prevent production or service interruptions at our global facilities, a major earthquake, fire, flood, power loss or other catastrophic event that results in the destruction or delay of any of our critical business operations could result in our incurring significant liability to customers or other third parties, cause significant reputational damage or have a material adverse effect on our business, operating results or financial condition.
Certain of these risks can be hedged to a limited degree using financial instruments, or other measures, and some of these risks are insurable, but any such mitigation efforts are costly and may not always be fully successful. Our ability to engage in such mitigation efforts has decreased or become even more costly as a result of recent market developments.
If we do not introduce new products in a timely manner, we may lose market share and be unable to achieve revenue growth targets.
We sell many of our products in industries characterized by rapid technological change, frequent new product and service introductions, and evolving customer needs and industry standards. Many of the businesses competing with us in these industries have significant financial and other resources to invest in new technologies, substantial intellectual property portfolios, substantial experience in new product development, regulatory expertise, manufacturing capabilities, and established distribution channels to deliver products to customers. Our products could become technologically obsolete over time, or we may invest in technology that does not lead to revenue growth or continue to sell products for which the demand from our customers is declining, in which case we may lose market share or not achieve our revenue growth targets. The success of our new product offerings will depend upon several factors, including our ability to:
•
accurately anticipate customer needs,
•
innovate and develop new technologies and applications,
•
successfully commercialize new technologies in a timely manner,
•
price our products competitively, and manufacture and deliver our products in sufficient volumes and on time, and
•
differentiate our offerings from our competitors’ offerings.
Many of our products are used by our customers to develop, test and manufacture their products. We must anticipate industry trends and consistently develop new products to meet our customers’ expectations. In developing new products, we may be required to make significant investments before we can determine the commercial viability of the new product. If we fail to accurately foresee our customers’ needs and future activities, we may invest heavily in research and development of products that do not lead to significant revenue. We may also suffer a loss in market share and potential revenue if we are unable to commercialize our technology in a timely and efficient manner.
In addition, some of our licensed technology is subject to contractual restrictions, which may limit our ability to develop or commercialize products for some applications.

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We may not be able to successfully execute acquisitions or license technologies, integrate acquired businesses or licensed technologies into our existing businesses, make acquired businesses or licensed technologies profitable, or successfully divest businesses.
We have in the past supplemented, and may in the future supplement, our internal growth by acquiring businesses and licensing technologies that complement or augment our existing product lines, such as our acquisition of Haoyuan in the fourth quarter of fiscal year 2012 and Caliper in the fourth quarter of fiscal year 2011. However, we may be unable to identify or complete promising acquisitions or license transactions for many reasons, such as:
•
competition among buyers and licensees,
•
the high valuations of businesses and technologies,
•
the need for regulatory and other approval, and
•
our inability to raise capital to fund these acquisitions.
Some of the businesses we acquire may be unprofitable or marginally profitable, or may increase the variability of our revenue recognition. Accordingly, the earnings or losses of acquired businesses may dilute our earnings. For these acquired businesses to achieve acceptable levels of profitability, we would have to improve their management, operations, products and market penetration. We may not be successful in this regard and may encounter other difficulties in integrating acquired businesses into our existing operations, such as incompatible management, information or other systems, cultural differences, loss of key personnel, unforeseen regulatory requirements, previously undisclosed liabilities or difficulties in predicting financial results. Additionally, if we are not successful in selling businesses we seek to divest, the activity of such businesses may dilute our earnings and we may not be able to achieve the expected benefits of such divestitures. As a result, our financial results may differ from our forecasts or the expectations of the investment community in a given quarter or over the long term.
To finance our acquisitions, we may have to raise additional funds, either through public or private financings. We may be unable to obtain such funds or may be able to do so only on terms unacceptable to us. We may also incur expenses related to completing acquisitions or licensing technologies, or in evaluating potential acquisitions or technologies, which may adversely impact our profitability.
We may not be successful in adequately protecting our intellectual property.
Patent and trade secret protection is important to us because developing new products, processes and technologies gives us a competitive advantage, although it is time-consuming and expensive. We own many United States and foreign patents and intend to apply for additional patents. Patent applications we file, however, may not result in issued patents or, if they do, the claims allowed in the patents may be narrower than what is needed to protect fully our products, processes and technologies. The expiration of our previously issued patents may cause us to lose a competitive advantage in certain of the products and services we provide. Similarly, applications to register our trademarks may not be granted in all countries in which they are filed. For our intellectual property that is protected by keeping it secret, such as trade secrets and know-how, we may not use adequate measures to protect this intellectual property.
Third parties may also challenge the validity of our issued patents, may circumvent or “design around” our patents and patent applications, or may claim that our products, processes or technologies infringe their patents. In addition, third parties may assert that our product names infringe their trademarks. We may incur significant expense in legal proceedings to protect our intellectual property against infringement by third parties or to defend against claims of infringement by third parties. Claims by third parties in pending or future lawsuits could result in awards of substantial damages against us or court orders that could effectively prevent us from manufacturing, using, importing or selling our products in the United States or other countries.
If we are unable to renew our licenses or otherwise lose our licensed rights, we may have to stop selling products or we may lose competitive advantage.
We may not be able to renew our existing licenses, or licenses we may obtain in the future, on terms acceptable to us, or at all. If we lose the rights to a patented or other proprietary technology, we may need to stop selling products incorporating that technology and possibly other products, redesign our products or lose a competitive advantage. Potential competitors could in-license technologies that we fail to license and potentially erode our market share.

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Our licenses typically subject us to various economic and commercialization obligations. If we fail to comply with these obligations, we could lose important rights under a license, such as the right to exclusivity in a market. In some cases, we could lose all rights under the license. In addition, rights granted under the license could be lost for reasons out of our control. For example, the licensor could lose patent protection for a number of reasons, including invalidity of the licensed patent, or a third-party could obtain a patent that curtails our freedom to operate under one or more licenses.
If we do not compete effectively, our business will be harmed.
We encounter aggressive competition from numerous competitors in many areas of our business. We may not be able to compete effectively with all of these competitors. To remain competitive, we must develop new products and periodically enhance our existing products. We anticipate that we may also have to adjust the prices of many of our products to stay competitive. In addition, new competitors, technologies or market trends may emerge to threaten or reduce the value of entire product lines.
Our quarterly operating results could be subject to significant fluctuation, and we may not be able to adjust our operations to effectively address changes we do not anticipate, which could increase the volatility of our stock price and potentially cause losses to our shareholders.
Given the nature of the markets in which we participate, we cannot reliably predict future revenue and profitability. Changes in competitive, market and economic conditions may require us to adjust our operations, and we may not be able to make those adjustments or make them quickly enough to adapt to changing conditions. A high proportion of our costs are fixed, due in part to our research and development and manufacturing costs. As a result, small declines in sales could disproportionately affect our operating results in a quarter. Factors that may affect our quarterly operating results include:
•
demand for and market acceptance of our products,
•
competitive pressures resulting in lower selling prices,
•
changes in the level of economic activity in regions in which we do business,
•
changes in general economic conditions or government funding,
•
settlements of income tax audits,
•
expenses incurred in connection with claims related to environmental conditions at locations where we conduct or formerly conducted operations,
•
differing tax laws and changes in those laws, or changes in the countries in which we are subject to taxation,
•
changes in our effective tax rate,
•
changes in industries, such as pharmaceutical and biomedical,
•
changes in the portions of our revenue represented by our various products and customers,
•
our ability to introduce new products,
•
our competitors’ announcement or introduction of new products, services or technological innovations,
•
costs of raw materials, energy or supplies,
•
our ability to execute ongoing productivity initiatives,
•
changes in the volume or timing of product orders,
•
fluctuation in the expense related to mark-to-market on postretirement benefit plans, and
•
changes in assumptions used to determine contingent consideration in acquisitions.
A significant disruption in third-party package delivery and import/export services, or significant increases in prices for those services, could interfere with our ability to ship products, increase our costs and lower our profitability.
We ship a significant portion of our products to our customers through independent package delivery and import/export companies, including UPS and Federal Express in the United States; TNT, UPS and DHL in Europe; and UPS in Asia. We also ship our products through other carriers, including national trucking firms, overnight carrier services and the United States Postal Service. If one or more of the package delivery or import/export providers experiences a significant disruption in services or institutes a significant price increase, we may have to seek alternative providers and the delivery of our products

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could be prevented or delayed. Such events could cause us to incur increased shipping costs that could not be passed on to our customers, negatively impacting our profitability and our relationships with certain of our customers.
Disruptions in the supply of raw materials, certain key components and other goods from our limited or single source suppliers could have an adverse effect on the results of our business operations, and could damage our relationships with customers.
The production of our products requires a wide variety of raw materials, key components and other goods that are generally available from alternate sources of supply. However, certain critical raw materials, key components and other goods required for the production and sale of some of our principal products are available from limited or single sources of supply. We generally have multi-year contracts with no minimum purchase requirements with these suppliers, but those contracts may not fully protect us from a failure by certain suppliers to supply critical materials or from the delays inherent in being required to change suppliers and, in some cases, validate new raw materials. Such raw materials, key components and other goods can usually be obtained from alternative sources with the potential for an increase in price, decline in quality or delay in delivery. A prolonged inability to obtain certain raw materials, key components or other goods is possible and could have an adverse effect on our business operations, and could damage our relationships with customers.
The manufacture and sale of products and services may expose us to product liability claims for which we could have substantial liability.
We face an inherent business risk of exposure to product liability claims if our products, services or product candidates are alleged or found to have caused injury, damage or loss. We may in the future be unable to obtain insurance with adequate levels of coverage for potential liability on acceptable terms or claims of this nature may be excluded from coverage under the terms of any insurance policy that we can obtain. If we are unable to obtain such insurance or the amounts of any claims successfully brought against us substantially exceed our coverage, then our business could be adversely impacted.
If we fail to maintain satisfactory compliance with the regulations of the United States Food and Drug Administration and other governmental agencies, we may be forced to recall products and cease their manufacture and distribution, and we could be subject to civil or criminal penalties.
Our operations are subject to regulation by different state and federal government agencies in the United States and other countries. If we fail to comply with those regulations, we could be subject to fines, penalties, criminal prosecution or other sanctions. Some of the products produced by our Human Health segment are subject to regulation by the United States Food and Drug Administration and similar foreign and domestic agencies. These regulations govern a wide variety of product activities, from design and development to labeling, manufacturing, promotion, sales, resales and distribution. If we fail to comply with those regulations or those of similar foreign and domestic agencies, we may have to recall products, cease their manufacture and distribution, and may be subject to fines or criminal prosecution.
Changes in governmental regulations may reduce demand for our products or increase our expenses.
We compete in markets in which we or our customers must comply with federal, state, local and foreign regulations, such as environmental, health and safety, and food and drug regulations. We develop, configure and market our products to meet customer needs created by these regulations. Any significant change in these regulations could reduce demand for our products or increase our costs of producing these products.
The healthcare industry is highly regulated and if we fail to comply with its extensive system of laws and regulations, we could suffer fines and penalties or be required to make significant changes to our operations which could have a significant adverse effect on the results of our business operations.
The healthcare industry, including the genetic screening market, is subject to extensive and frequently changing international and United States federal, state and local laws and regulations. In addition, legislative provisions relating to healthcare fraud and abuse, patient privacy violations and misconduct involving government insurance programs provide federal enforcement personnel with substantial powers and remedies to pursue suspected violations. We believe that our business will continue to be subject to increasing regulation as the federal government continues to strengthen its position on healthcare matters, the scope and effect of which we cannot predict. If we fail to comply with applicable laws and regulations, we could suffer civil and criminal damages, fines and penalties, exclusion from participation in governmental healthcare programs, and the loss of various licenses, certificates and authorizations necessary to operate our business, as well as incur liabilities from third-party claims, all of which could have a significant adverse effect on our business.

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Economic, political and other risks associated with foreign operations could adversely affect our international sales and profitability.
Because we sell our products worldwide, our businesses are subject to risks associated with doing business internationally. Our sales originating outside the United States represented the majority of our total revenue in fiscal year 2012 . We anticipate that sales from international operations will continue to represent a substantial portion of our total revenue. In addition, many of our manufacturing facilities, employees and suppliers are located outside the United States. Accordingly, our future results of operations could be harmed by a variety of factors, including:
•
changes in foreign currency exchange rates,
•
changes in a country’s or region’s political or economic conditions, particularly in developing or emerging markets,
•
longer payment cycles of foreign customers and timing of collections in foreign jurisdictions,
•
trade protection measures and import or export licensing requirements,
•
differing tax laws and changes in those laws, or changes in the countries in which we are subject to tax,
•
adverse income tax audit settlements or loss of previously negotiated tax incentives,
•
differing business practices associated with foreign operations,
•
difficulty in transferring cash between international operations and the United States,
•
difficulty in staffing and managing widespread operations,
•
differing labor laws and changes in those laws,
•
differing protection of intellectual property and changes in that protection,
•
increasing global enforcement of anti-bribery and anti-corruption laws, and
•
differing regulatory requirements and changes in those requirements.
If we do not retain our key personnel, our ability to execute our business strategy will be limited.
Our success depends to a significant extent upon the continued service of our executive officers and key management and technical personnel, particularly our experienced engineers and scientists, and on our ability to continue to attract, retain, and motivate qualified personnel. The competition for these employees is intense. The loss of the services of key personnel could have a material adverse effect on our operating results. In addition, there could be a material adverse effect on us should the turnover rates for key personnel increase significantly or if we are unable to continue to attract qualified personnel. We do not maintain any key person life insurance policies on any of our officers or employees.
Our success also depends on our ability to execute leadership succession plans. The inability to successfully transition key management roles could have a material adverse effect on our operating results.
If we experience a significant disruption in, or breach in security of, our information technology systems, or if we fail to implement new systems, software and technologies successfully, our business could be adversely affected.
We rely on several centralized information technology systems throughout our company to provide products and services, keep financial records, process orders, manage inventory, process shipments to customers and operate other critical functions. Our information technology systems may be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, computer viruses, attacks by computer hackers, telecommunication failures, user errors, catastrophes or other unforeseen events. If we were to experience a prolonged system disruption in the information technology systems that involve our interactions with customers or suppliers, it could result in the loss of sales and customers and significant incremental costs, which could adversely affect our business. In addition, security breaches of our information technology systems could result in the misappropriation or unauthorized disclosure of confidential information belonging to us or to our employees, partners, customers or suppliers, which could result in our suffering significant financial or reputational damage.

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We have a substantial amount of outstanding debt, which could impact our ability to obtain future financing and limit our ability to make other expenditures in the conduct of our business.
Our debt level and related debt service obligations could have negative consequences, including:
•
requiring us to dedicate significant cash flow from operations to the payment of principal and interest on our debt, which reduces the funds we have available for other purposes, such as acquisitions and stock repurchases;
•
reducing our flexibility in planning for or reacting to changes in our business and market conditions; and
•
exposing us to interest rate risk since a portion of our debt obligations are at variable rates.
In addition, we may incur additional indebtedness in the future to meet future financing needs. If we add new debt, the risks described above could increase.
Restrictions in our senior unsecured revolving credit facility and other debt instruments may limit our activities.
Our senior unsecured revolving credit facility, our 6% senior unsecured notes due 2015 (the “2015 Notes”) and our 5% senior unsecured notes due 2021 (the "2021 Notes") include restrictive covenants that limit our ability to engage in activities that could otherwise benefit our company. These include restrictions on our ability and the ability of our subsidiaries to:
•
pay dividends on, redeem or repurchase our capital stock,
•
sell assets,
•
incur obligations that restrict our subsidiaries’ ability to make dividend or other payments to us,
•
guarantee or secure indebtedness,
•
enter into transactions with affiliates, and
•
consolidate, merge or transfer all, or substantially all, of our assets and the assets of our subsidiaries on a consolidated basis.
We are also required to meet specified financial ratios under the terms of certain of our existing debt instruments. Our ability to comply with these financial restrictions and covenants is dependent on our future performance, which is subject to prevailing economic conditions and other factors, including factors that are beyond our control, such as foreign exchange rates, interest rates, changes in technology and changes in the level of competition. In addition, if we are unable to maintain our investment grade credit rating, our borrowing costs would increase and we would be subject to different and potentially more restrictive financial covenants under some of our existing debt instruments.
Any future indebtedness that we incur may include similar or more restrictive covenants. Our failure to comply with any of the restrictions in our senior unsecured revolving credit facility, our 2015 Notes, our 2021 Notes or any future indebtedness may result in an event of default under those debt instruments, which could permit acceleration of the debt under those debt instruments, and require us to prepay that debt before its scheduled due date under certain circumstances.
Our results of operations will be adversely affected if we fail to realize the full value of our intangible assets.
As of December 30, 2012 , our total assets included $2.7 billion of net intangible assets. Net intangible assets consist principally of goodwill associated with acquisitions and costs associated with securing patent rights, trademark rights, core technology and technology licenses, net of accumulated amortization. We test certain of these items—specifically all of those that are considered “non-amortizing”—at least annually for potential impairment by comparing the carrying value to the fair market value of the reporting unit to which they are assigned. All of our amortizing intangible assets are also evaluated for impairment should events occur that call into question the value of the intangible assets.
Adverse changes in our business, adverse changes in the assumptions used to determine the fair value of our reporting units, or the failure to grow our Human Health and Environmental Health segments may result in impairment of our intangible assets, which could adversely affect our results of operations.

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Our share price will fluctuate.
Over the last several quarters, stock markets in general and our common stock in particular have experienced significant price and volume volatility. Both the market price and the daily trading volume of our common stock may continue to be subject to significant fluctuations due not only to general stock market conditions but also to a change in sentiment in the market regarding our operations and business prospects. In addition to the risk factors discussed above, the price and volume volatility of our common stock may be affected by:
•
operating results that vary from the expectations of securities analysts and investors,
•
the financial performance of the major end markets that we target,
•
the operating and securities price performance of companies that investors consider to be comparable to us,
•
announcements of strategic developments, acquisitions and other material events by us or our competitors, and
•
changes in global financial markets and global economies and general market conditions, such as interest or foreign exchange rates, commodity and equity prices and the value of financial assets.
Dividends on our common stock could be reduced or eliminated in the future.
On January 25, 2013 , we announced that our Board had declared a quarterly dividend of $0.07 per share for the fourth quarter of fiscal year 2012 that will be payable in May 2013 . 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.
 
Item 1B.
Unresolved Staff Comments
 
Not applicable.
 
Item 2.
Properties
 
As of December 30, 2012 , our continuing operations occupied 2,635,567 square feet in over 116 locations. We own 549,154 square feet of this space, and lease the balance. We conduct our operations in manufacturing and assembly plants, research laboratories, administrative offices and other facilities located in 15 states and 32 foreign countries.
 
Facilities outside of the United States account for approximately 1,414,376 square feet of our owned and leased property, or approximately 54% of our total occupied space.

Our real property leases are both short-term and long-term. We believe that our properties are well-maintained and are adequate for our present requirements.
 
The following table indicates, as of December 30, 2012 , the approximate square footage of real property owned and leased attributable to the continuing operations of our reporting segments:
 
 
Owned
 
Leased
 
Total
 
(In square feet)
Human Health
536,173

 
929,381

 
1,465,554

Environmental Health
12,981

 
1,073,491

 
1,086,472

Corporate offices
—

 
83,541

 
83,541

Continuing operations
549,154

 
2,086,413

 
2,635,567

 
Item 3.
Legal Proceedings
 
Enzo Biochem, Inc. and Enzo Life Sciences, Inc. (collectively, “Enzo”) filed a complaint dated October 23, 2002 in the United States District Court for the Southern District of New York, Civil Action No. 02-8448, seeking injunctive and monetary relief against Amersham plc, Amersham BioSciences, PerkinElmer, Inc., PerkinElmer Life Sciences, Inc., Sigma-Aldrich Corporation, Sigma Chemical Company, Inc., Molecular Probes, Inc., and Orchid BioSciences, Inc. The complaint alleges that we breached our 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, separately and together with the other defendants. We filed an answer and a counterclaim alleging that Enzo's patents are invalid. In 2007, after the court issued a decision in 2006 regarding the construction of the claims in Enzo's patents that effectively limited the coverage of certain of those claims and, we believe, excluded certain of our products from the coverage of Enzo's patents, summary judgment motions were filed by the defendants.

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The case was assigned to a new district court judge in January 2009 and in March 2009, the new judge denied the pending summary judgment motions without prejudice and ordered a stay of the case until the federal appellate court decided Enzo's appeal of the judgment of the United States District Court for the District of Connecticut in Enzo Biochem vs. Applera Corp. and Tropix, Inc. (the “Connecticut Case”), which involved a number of the same patents and which could materially affect the scope of Enzo's case against us. In March 2010, the United States Court of Appeals for the Federal Circuit affirmed-in-part and reversed-in-part the judgment in the Connecticut Case. The district court permitted us and the other defendants to jointly file a motion for summary judgment on certain patent and other issues common to all of the defendants. On September 12, 2012, the court granted in part and denied in part our motion for summary judgment of non-infringement. On December 21, 2012, we filed a second motion for summary judgment on claims that were not addressed in the first motion. The second motion is pending. The district court has permitted Enzo to take limited discovery directed to the motion with briefing to be concluded in May 2013.
We believe we have meritorious defenses to the matter described above, and we are contesting the action vigorously. While this matter is subject to uncertainty, in the opinion of our management, based on its review of the information available at this time, the resolution of this matter will not have a material adverse effect on our consolidated financial statements included in this annual report on Form 10-K.
 
We are also subject to various other claims, legal proceedings and investigations covering a wide range of matters that arise in the ordinary course of our business activities. Although we have established accruals for potential losses that we believe are probable and reasonably estimable, in the opinion of our management, based on its review of the information available at this time, the total cost of resolving these other contingencies at December 30, 2012 should not have a material adverse effect on our consolidated financial statements included in this annual report on Form 10-K. However, each of these matters is subject to uncertainties, and it is possible that some of these matters may be resolved unfavorably to us.

Item 4.
Mine Safety Disclosures
 
Not applicable.
 

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EXECUTIVE OFFICERS OF THE REGISTRANT
 
Listed below are our executive officers as of February 26, 2013 . No family relationship exists between any one of these officers and any of the other executive officers or directors.
 
Name
 
Position
 
Age
Robert F. Friel
 
Chairman, Chief Executive Officer and President
 
57
Frank A. Wilson
 
Senior Vice President and Chief Financial Officer
 
54
Joel S. Goldberg
 
Senior Vice President, General Counsel and Secretary
 
44
Daniel R. Marshak
 
Senior Vice President and Chief Scientific Officer
 
55
John R. Letcher
 
Senior Vice President, Human Resources
 
51
James Corbett
 
Senior Vice President and President, Diagnostics
 
50
E. Kevin Hrusovsky
 
Senior Vice President and President, Life Sciences and Technology
 
51
Maurice H. Tenney
 
Senior Vice President and President, Environmental Health
 
49
Andrew Okun
 
Vice President and Chief Accounting Officer
 
43
 
Robert F. Friel, 57.  Mr. Friel was named our Chief Executive Officer in February 2008. Mr. Friel joined us in February 1999 as our Senior Vice President and Chief Financial Officer. In 2004, he was named Executive Vice President and Chief Financial Officer with responsibility for business development and information technology, in addition to his oversight of the finance function. In January 2006, he was named our Vice Chairman, President of Life and Analytical Sciences and elected to our Board. In July 2007, he was named President and Chief Operating Officer, effective August 1, 2007. From 1980 to 1999, he held several senior management positions with AlliedSignal, Inc., now Honeywell International. He holds a Bachelor of Arts degree in economics from Lafayette College and a Master of Science degree in taxation from Fairleigh Dickinson University. Mr. Friel is currently a director of CareFusion Corporation and Xylem Inc., and has served as a director of Fairchild Semiconductor Corp. and Millennium Pharmaceuticals, Inc. during the past five years. He also previously served on the national board of trustees for the March of Dimes Foundation.
 
Frank A. Wilson, 54. Mr. Wilson joined us in May 2009 and is our Senior Vice President and Chief Financial Officer. Prior to joining us in May 2009, Mr. Wilson held key financial and business management roles over 12 years at the Danaher Corporation, including Corporate Vice President of Investor Relations; Group Vice President of Business Development; Group Vice President of Finance for Danaher Motion Group; President of Gems Sensors; and Group Vice President of Finance for the Industrial Controls Group. Before joining Danaher, Mr. Wilson worked for several years at AlliedSignal Inc., now Honeywell International, where he last served as Vice President of Finance and Chief Financial Officer for Commercial Aviations Systems. Prior to joining AlliedSignal Inc., he worked at PepsiCo Inc. in financial and controllership positions of increasing responsibility, E.F. Hutton and Company, and KPMG Peat Marwick. Mr. Wilson received a Bachelor’s degree in business administration from Baylor University and is also a Certified Public Accountant.
 
Joel S. Goldberg , 44 . Mr. Goldberg joined us in July 2008 as our Senior Vice President, General Counsel and Secretary. Prior to joining us in July 2008, Mr. Goldberg served as Vice President, Chief Compliance Officer and Secretary for Millennium Pharmaceuticals, Inc. During his seven years with Millennium, he focused in the areas of mergers and acquisitions, strategic alliances, investment and financing transactions, securities and healthcare related compliance, and employment law. Before joining Millennium, Mr. Goldberg was an associate at the law firm of Edwards & Angell, LLP, focusing on emerging companies, venture capital, securities and merger-related work. Mr. Goldberg graduated from the Northeastern University School of Law and also holds a Masters in Business Administration from Northeastern University. He completed his undergraduate degree at the University of Wisconsin-Madison.
 
Daniel R. Marshak, 55. Dr. Marshak was appointed our Senior Vice President in April 2008, having joined us as our Chief Scientific Officer in May 2006. In addition to these responsibilities, in May 2010, Dr. Marshak was appointed President of our Emerging Diagnostics business. Dr. Marshak previously held the position of President, Greater China for us. Prior to joining us, Dr. Marshak was with Cambrex Corporation since 2000, most recently as Vice President and Chief Technology Officer for Biotechnology. Dr. Marshak also previously held the positions of Senior Vice President and Chief Scientific Officer for Osiris Therapeutics, Inc. and Senior Staff Investigator, Cold Spring Harbor Laboratory. Dr. Marshak received his Bachelor of Arts degree in biochemistry and molecular biology from Harvard University, and his doctorate in biochemistry and cell biology from The Rockefeller University. Dr. Marshak performed postdoctoral research in pharmacology at Vanderbilt University and the National Institute of Health. Dr. Marshak is the author of more than 100 scientific publications and an inventor on six United States patents.
 

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John R. Letcher, 51. Mr. Letcher was appointed our Senior Vice President of Human Resources, effective February 1, 2010. He joined us in 1999 as our Vice President of Human Resources for the Optoelectronics business unit and, in 2003, was named Vice President of Human Resources for the Life and Analytical Sciences business unit. In 2008, Mr. Letcher was named our Vice President Human Resources for all of our business units. Previously, he served as Director of Human Resources of ABB Americas, Inc., the U.S. subsidiary of an international engineering company. Prior to that, Mr. Letcher held the positions of Business Controller in ABB Americas, Inc.’s US Power Generation Gas Turbine Power business; Vice President of Finance for General Ship Corporation and Senior Auditor for Arthur Andersen. Mr. Letcher holds a Bachelor of Science degree in accounting and information technology from Boston College .
 
James Corbett, 50. Mr. Corbett was appointed a Senior Vice President in February 2012, and has been President of our Diagnostics business unit since May 2010. He joined us in November 2007 as President for the ViaCord business unit through the acquisition of ViaCell, Inc. and Mr. Corbett also served as Vice President and General Manager of the Americas for the Diagnostics business unit since November 2007. Prior to joining us, he held positions in Abbott Laboratories, BioChem Immunosystems, CADx Systems, and iCad. Mr. Corbett holds a Bachelor of Science degree in business from the University of Massachusetts.
 
E. Kevin Hrusovsky, 51. Mr. Hrusovsky was appointed a Senior Vice President in February 2012, and has been President of our Life Sciences and Technology business unit since he joined us in November 2011 through the acquisition of Caliper Life Sciences, Inc. Previously, Mr. Hrusovsky served as Chief Executive Officer and President of Caliper Life Sciences, Inc. since July 2003. Prior to that, he held the positions of Chief Executive Officer and President of Zymark and Director of International Business, Agricultural Chemical Division, and President of the Pharmaceutical Division for FMC Corporation. He also held several management positions at E.I. DuPont de Nemours. Mr. Hrusovsky holds a Bachelor of Science degree in mechanical engineering from Ohio State University and a Masters in Business Administration from Ohio University.
 
Maurice (Dusty) H. Tenney, III, 49. Mr. Tenney was appointed a Senior Vice President in February 2012, and has been President of our Environmental Health business unit (formerly known as our Analytical Sciences and Laboratory Services business unit) since 2009. He joined us in 2001 as Vice President of Global Operations for the Analytical Instruments business unit and, in 2004, was named President of our Laboratory Services business unit. Prior to joining us, he held positions with Honeywell, Lockheed Martin and GE Aerospace. Mr. Tenney holds a Bachelor of Science degree in mechanical engineering from the University of Maryland and a Master of Science degree in mechanical engineering from the University of Vermont.
 
Andrew Okun, 43. Mr. Okun was appointed our Vice President and Chief Accounting Officer in April 2011. He joined us in 2001 as part of the controllership organization for the Optoelectronics business unit and over the next eight years Mr. Okun assumed positions of increasing responsibility in the areas of controllership and financial planning and analysis, including serving as Controller for the Optoelectronics business unit. In 2009, Mr. Okun was named our Vice President and Corporate Controller. Prior to joining us, he held positions with Honeywell, ultimately becoming the Site Controller for its Commercial Avionics business, and the position of Senior Tax Associate for Coopers & Lybrand. Mr. Okun holds a Bachelor of Arts degree in economics from the University of California at Santa Barbara, a Masters in Business Administration from the University of Virginia, and is a Certified Public Accountant .

PART II

Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Price of Common Stock
Our common stock is listed and traded on the New York Stock Exchange. The following table sets forth the high and low per share closing sale prices for our common stock on that exchange for each quarter in fiscal years 2012 and 2011 .
 
 
2012 Fiscal Quarters
 
First
 
Second
 
Third
 
Fourth
High

$27.85

 

$28.08

 

$30.36

 

$32.29

Low
20.37

 
24.82

 
23.88

 
27.84

 
 
 
 
 
 
 
 
 
2011 Fiscal Quarters
 
First
 
Second
 
Third
 
Fourth
High

$28.03

 

$28.46

 

$27.55

 

$21.61

Low
24.72

 
25.77

 
18.84

 
17.49

 

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As of February 22, 2013 , we had approximately 5,306 holders of record of our common stock.
 
Stock Repurchase Program
The following table provides information with respect to the shares of common stock repurchased by us for the periods indicated.
 
 
Issuer Repurchases of Equity Securities
Period
Total Number of
Shares
Purchased (1)(2)
 
Average Price
Paid Per
Share
 
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
 
Maximum Number of
Shares that May Yet
Be Purchased
Under the Plans or
Programs
October 1, 2012—October 28, 2012
77

 
29.69

 
—

 
6,000,000

October 29, 2012—November 25, 2012
333

 
30.14

 
—

 
6,000,000

November 26, 2012—December 30, 2012
—

 
—

 
—

 
6,000,000

Activity for quarter ended December 30, 2012
410

 
30.06

 
—

 
6,000,000

____________________________
(1)
On October 23, 2008, we announced that our Board authorized us to repurchase up to 10.0 million shares of common stock under a stock repurchase program (the “Repurchase Program”). On August 31, 2010, we announced that our Board had authorized us to repurchase an additional 5.0 million shares of common stock under the Repurchase Program. The Repurchase Program expired on October 22, 2012. On October 24, 2012, our Board authorized us to repurchase up to 6.0 million shares of common stock under a new stock repurchase program (the "New Repurchase Program"). The New Repurchase Program will expire on October 24, 2014 unless terminated earlier by our Board, and may be suspended or discontinued at any time. During the fourth quarter of fiscal year 2012 , we did not repurchase any shares of common stock under either of the stock repurchase programs. As of December 30, 2012 , all 6.0 million shares authorized by our Board under the New Repurchase Program remained available for repurchase. From December 31, 2012 through February 22, 2013 , we repurchased approximately 2.6 million shares of common stock in the open market at an aggregate cost of $89.0 million , including commissions, under the New Repurchase Program. 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.
(2)
Our Board has authorized us 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 our equity incentive plans. During the fourth quarter of fiscal year 2012 , we repurchased 410 shares of common stock for this purpose. 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
During fiscal years 2012 and 2011 , we declared regular quarterly cash dividends on our common stock. The table below sets forth the cash dividends per share that we declared on our common stock during each of those fiscal years, by quarter.
 
 
2012 Fiscal Quarters
 
2012 Total
First
 
Second
 
Third
 
Fourth
 
 
Cash dividends declared per common share
$
0.07

 
$
0.07

 
$
0.07

 
$
0.07

 
$
0.28

 
 
 
 
 
 
 
 
 
 
 
2011 Fiscal Quarters
 
2011 Total
 
First
 
Second
 
Third
 
Fourth
 
 
Cash dividends declared per common share
$
0.07

 
$
0.07

 
$
0.07

 
$
0.07

 
$
0.28

 
While it is our current intention to pay regular quarterly cash dividends, any decision to pay future cash dividends will be made by our Board and will depend on our earnings, financial condition and other factors. Our Board may reduce or eliminate our common stock dividend in order to fund investments for growth, repurchase shares or conserve capital resources. For further information related to our stockholders’ equity, see Note 19 to our consolidated financial statements included in this annual report on Form 10-K.


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Table of Contents


Stock Performance Graph
Set forth below is a line graph comparing the cumulative total shareholder return on our common stock against the cumulative total return of the S&P Composite-500 Index and a Peer Group Index for the five fiscal years from December 30, 2007 to December 30, 2012 . Our Peer Group Index consists of Affymetrix, Inc., Agilent Technologies Inc., Life Technologies Corporation, Thermo Fisher Scientific Inc., and Waters Corporation.
 
Comparison of Five-Year Cumulative Total Return
PerkinElmer, Inc. Common Stock, S&P Composite-500 and
Peer Group Index
 
TOTAL RETURN TO SHAREHOLDERS
(Includes reinvestment of dividends)

 

 
December 30,
2007
 
December 28,
2008
 
January 3,
2010
 
January 2,
2011
 
January 1,
2012
 
December 30,
2012
PerkinElmer, Inc.
$
100.00

 
$
51.76

 
$
81.13

 
$
103.07

 
$
80.79

 
$
126.69

S&P 500 Index
$
100.00

 
$
63.00

 
$
79.67

 
$
91.67

 
$
93.61

 
$
108.59

Peer Group
$
100.00

 
$
48.62

 
$
82.16

 
$
97.85

 
$
80.01

 
$
101.52




24
Table of Contents


Item 6.
Selected Financial Data
 
The following table sets forth selected historical financial information as of and for each of the fiscal years in the five-year period ended December 30, 2012 . We derived the selected historical financial information for the balance sheets for the fiscal years ended December 30, 2012 and January 1, 2012 and the statement of operations for each of the fiscal years in the three-year period ended December 30, 2012 from our audited consolidated financial statements which are included elsewhere in this annual report on Form 10-K. We derived the selected historical financial information for the statements of operations for the fiscal years ended January 3, 2010 and December 28, 2008 from our audited consolidated financial statements which are not included in this annual report on Form 10-K. We derived the selected historical financial information for the balance sheets as of January 2, 2011 , January 3, 2010 and December 28, 2008 from our audited consolidated financial statements which are not included in this annual report on Form 10-K. We adjusted the information in the consolidated financial statements for the fiscal years ended January 3, 2010 and December 28, 2008 , where appropriate, to account for the adoption of new guidance applicable to certain of our health care businesses, our change in accounting for pension and other postretirement benefit plans and for discontinued operations.
 
Our historical financial information may not be indicative of our future results of operations or financial position.
 
The following selected historical financial information should be read together with our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, including the related notes, included elsewhere in this annual report on Form 10-K.
 
 
Fiscal Years Ended
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
January 3,
2010
 
December 28,
2008
 
 
 
(As adjusted)
 
(In thousands, except per share data)
Statement of Operations Data:
 
 
 
 
 
 
 
 
 
Revenue
$
2,115,205

 
$
1,918,508

 
$
1,701,767

 
$
1,546,790

 
$
1,653,388

Operating income from continuing
operations (1)(2)(3)(4)(5)(6)
98,543

 
91,128

 
157,568

 
115,946

 
75,882

Interest and other expense (income), net (7)(8)(9)
47,956

 
26,774

 
(8,383
)
 
15,787

 
44,039

Income from continuing operations before income taxes
50,587

 
64,354

 
165,951

 
100,159

 
31,843

Income from continuing operations, net of income taxes (10)(11)(12)(13)(14)
68,441

 
1,172

 
138,908

 
73,461

 
45,333

Income from discontinued operations and dispositions, net of income taxes (14)(15)
1,499

 
6,483

 
252,075

 
8,620

 
23,973

Net income
$
69,940

 
$
7,655

 
$
390,983

 
$
82,081

 
$
69,306

Basic earnings per share:
 
 
 
 
 
 
 
 
 
Continuing operations
$
0.60

 
$
0.01

 
$
1.19

 
$
0.63

 
$
0.39

Discontinued operations
0.01

 
0.06

 
2.15

 
0.07

 
0.20

Net income
$
0.61

 
$
0.07

 
$
3.34

 
$
0.71

 
$
0.59

Diluted earnings per share:
 
 
 
 
 
 
 
 
 
Continuing operations
$
0.60

 
$
0.01

 
$
1.18

 
$
0.63

 
$
0.38

Discontinued operations
0.01

 
0.06

 
2.14

 
0.07

 
0.20

Net income
$
0.61

 
$
0.07

 
$
3.31

 
$
0.70

 
$
0.58

Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
 
Basic:
113,728

 
112,976

 
117,109

 
116,250

 
117,659

Diluted:
114,860

 
113,864

 
117,982

 
116,590

 
118,687

Cash dividends declared per common share
$
0.28

 
$
0.28

 
$
0.28

 
$
0.28

 
$
0.28



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As of
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
January 3,
2010
 
December 28,
2008
 
 
 
(As adjusted)
 
 
 
 
 
 
 
(In thousands)
Balance Sheet Data:
 
 
 
 
 
 
 
 
 
Total assets (15)
$
3,901,762

 
$
3,855,641

 
$
3,208,946

 
$
3,058,754

 
$
2,932,923

Short-term debt
1,772

 
—

 
2,255

 
146

 
40

Long-term debt (16)(17)(18)
938,824

 
944,908

 
424,000

 
558,197

 
509,040

Stockholders’ equity (2)(19)
1,939,812

 
1,842,216

 
1,925,391

 
1,628,671

 
1,569,099

Common shares outstanding (19)
115,036

 
113,157

 
115,715

 
117,023

 
117,112

____________________________
(1)
In fiscal year 2012, we adopted new guidance for certain of our health care businesses that recognize patient service revenue at the time the services are rendered where we do not assess the patient's ability to pay at such time. The effects of the adoption on our consolidated statements of operations were decreases to revenue with corresponding decreases to selling, general and administrative expenses of $2.8 million in fiscal year 2012 , $2.8 million in fiscal year 2011 , $2.6 million in fiscal year 2010 , $4.0 million in fiscal year 2009 and $6.3 million in fiscal year 2008.
(2)
The expense related to mark-to-market on postretirement benefit plans was a pre-tax loss of $31.8 million in fiscal year 2012 , a pre-tax loss of $67.9 million in fiscal year 2011 , a pre-tax loss of $0.2 million in fiscal year 2010 , a pre-tax loss of $6.4 million in fiscal year 2009 and a pre-tax loss of $75.2 million in fiscal year 2008.
(3)
We adopted the authoritative guidance for stock compensation on January 2, 2006. The total incremental pre-tax compensation expense recorded in continuing operations related to stock options was $5.1 million in fiscal year 2012 , $4.5 million in fiscal year 2011 , $6.2 million in fiscal year 2010 , $7.9 million in fiscal year 2009 and $9.2 million in fiscal year 2008.
(4)
We incurred pre-tax restructuring and contract termination charges, net, of $25.1 million in fiscal year 2012 , $13.5 million in fiscal year 2011 , $19.0 million in fiscal year 2010 , $18.0 million in fiscal year 2009, and $6.7 million in fiscal year 2008.
(5)
On April 27, 2010 we sold a building which provided net proceeds of $11.0 million. We recorded a pre-tax gain of $3.4 million in operating income.
(6)
In fiscal year 2012, we incurred pre-tax impairment charges of $74.2 million as a result of a review of certain of our trade names within our portfolio as part of a realignment of our marketing strategy. In fiscal year 2011, we incurred a pre-tax impairment charge of $3.0 million for the full impairment of license agreements, that we no longer intend to use.
(7)
In fiscal year 2012 and fiscal year 2011, interest expense was $45.8 million and $24.8 million , respectively, primarily due to the increased debt and the higher interest rates on those debt balances with the issuance of the senior unsecured notes due 2021. For fiscal year 2011, acquisition related financing costs related to certain acquisitions added an additional expense of $3.1 million , and is included in interest expense.
(8)
In fiscal year 2010, we acquired the remaining fifty percent equity interest in our joint venture (the "ICPMS Joint Venture") with the company previously known as MDS, Inc. for the development and manufacturing of our Inductively Coupled Plasma Mass Spectrometry product line. The fair value of the acquisition was $67.7 million, including cash consideration of $35.0 million, non-cash consideration of $2.6 million for certain non-exclusive rights to intangible assets we own, and $30.4 million representing the fair value of our fifty percent equity interest in the ICPMS Joint Venture held prior to the acquisition. We recognized a pre-tax gain of $25.6 million from the re-measurement to fair value of our previously held equity interest in the ICPMS Joint Venture. This pre-tax gain is reported in interest and other (income) expense, net, for fiscal year 2010.
(9)
In fiscal year 2008, we settled forward interest rate contracts with notional amounts totaling $150.0 million upon the issuance of our 6% senior unsecured notes, and recognized $8.4 million, net of taxes of $5.4 million, of accumulated derivative losses in other comprehensive (loss) income. We also discontinued forward interest rate contracts with notional amounts totaling $150.0 million during fiscal year 2008. The discontinued cash flow hedges were immediately settled with counterparties, and the $17.5 million loss was recognized as interest and other (income) expense, net. In addition, during fiscal year 2008, interest expense was $23.7 million due to higher outstanding debt balances with the issuance of our 6% senior unsecured notes that primarily related to the purchase of ViaCell, Inc., which was partially offset by lower interest rates on our amended senior unsecured revolving credit facility.
(10)
The fiscal year 2012 benefit from income taxes was primarily due to a tax benefit of $7.0 million related to discrete items and losses in higher tax rate jurisdictions, which included the pre-tax impairment charges of $74.2 million , partially offset by a provision from income taxes related to profits in lower tax rate jurisdictions.
(11)
The fiscal year 2011 effective tax rate on continuing operations of 98.2% was primarily due to the fiscal year 2011 provision of $79.7 million related to our planned $350.0 million repatriation of previously unremitted earnings.

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Table of Contents


(12)
The fiscal year 2010 effective tax rate on continuing operations of 16.3% was primarily due to the favorable impact related to the gain on the previously held equity interest in the ICPMS Joint Venture.
(13)
The fiscal year 2008 effective tax rate on continuing operations of 12.3% was primarily due to a $15.6 million benefit related to the settlement of various income tax audits.
(14)
In fiscal year 2008, our Board of Directors (our "Board") approved separate plans to shut down our ViaCyte SM and Cellular Therapy Technology businesses, and our Cellular Screening Fluorescence and Luminescence workstations, Analytical Proteomics Instruments and Proteomics and Genomics Instruments businesses. We recognized a pre-tax loss of $12.8 million related to lease and severance costs and the reduction of fixed assets and inventory to net realizable value.
(15)
In November 2010, we sold our Illumination and Detection Solutions (“IDS”) business for approximately $500.0 million, $482.0 million net of payments for acquired cash balances, subject to an adjustment for working capital as of the closing date. We recognized a pre-tax gain of $315.3 million, inclusive of the net working capital adjustment, in fiscal year 2010 as a result of the sale of our IDS business. The gain was recognized as a gain on the disposition of discontinued operations.
(16)
In May 2008, we issued and sold seven-year senior notes at a rate of 6% with a face value of $150.0 million and received $150.0 million in gross proceeds from the issuance. The debt, which matures in May 2015, is unsecured.
(17)
In October 2011, we issued and sold ten-year senior notes at a rate of 5% with a face value of $500.0 million and received $496.9 million of net proceeds from the issuance. The debt, which matures in November 2021, is unsecured.
(18)
In June 2009, our consolidated subsidiary exercised the right to terminate the receivables purchase agreement with a third-party financial institution releasing both parties of their rights, liabilities and obligations under this agreement. We had an undivided interest in the receivables that had been sold to the third-party financial institution under this agreement of $40.0 million as of December 28, 2008.
(19)
In fiscal year 2012 , we did no t repurchase any shares of common stock under either of the stock purchase repurchase programs. In fiscal year 2011, we repurchased in the open market approximately 4.0 million shares of our common stock at an aggregate cost of $107.8 million , including commissions. In fiscal year 2010, we repurchased in the open market approximately 3.0 million shares of our common stock at an aggregate cost of $71.5 million, including commissions. In fiscal year 2009, we repurchased in the open market approximately 1.0 million shares of our common stock at an aggregate cost of $14.2 million, including commissions. In fiscal year 2008, we repurchased in the open market approximately 3.0 million shares of our common stock at an aggregate cost of $75.5 million, including commissions. 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. These repurchases were made pursuant to our stock repurchase program announced in October 2008, as modified in August 2010, which expired in October 2012.


27
Table of Contents


Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
This annual report on Form 10-K, including the following management’s discussion and analysis, contains forward-looking information that you should read in conjunction with the consolidated financial statements and notes to consolidated financial statements that we have included elsewhere in this annual report on Form 10-K. 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,” “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 above under the heading “Risk Factors” in Item 1A above 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.
 
Accounting Period
Our fiscal year ends on the Sunday nearest December 31. We report fiscal years under a 52/53 week format. Under this method, certain years will contain 53 weeks. Each of the fiscal years ended December 30, 2012 , January 1, 2012 and  January 2, 2011 included 52 weeks. The fiscal year ending December 29, 2013 will also include 52 weeks.
 
Overview of Fiscal Year 2012
During fiscal year 2012 , we continued to see good performance from acquisitions, investments in our ongoing technology and sales and marketing initiatives. Our overall revenue in fiscal year 2012 increase d $196.7 million , or 10% , as compared to fiscal year 2011 , reflecting an increase of $159.7 million , or 18% , in our Human Health segment revenue and an increase of $37.0 million , or 4% , in our Environmental Health segment revenue. The increase in our Human Health segment revenue during fiscal year 2012 was due to growth in the research market, including the addition of Caliper Life Sciences, Inc. ("Caliper"), as well as growth generated from both our screening and our medical imaging businesses within the diagnostics market. The increase in our Environmental Health segment revenue during fiscal year 2012 was due to growth in our informatics offerings within the laboratory services market and growth from our environmental, food and consumer safety and testing products, partially offset by decreased demand for our applications in the industrial markets.
In our Human Health segment during fiscal year 2012 as compared to fiscal year 2011 , we experienced growth in the research market due to continued demand for our in-vivo imaging systems with the addition of Caliper imaging systems, as well as increased demand for our JANUS ® automation tools and our Operetta ® cellular imaging systems. The growth in the research market was partially offset by reduced sales to pharmaceutical companies resulting from reduced research and development spending, as well as a decline in demand for our suite of radioactive reagents, particularly in Europe and Japan. We also experienced growth in the diagnostics market as birth rates in the United States continue to stabilize and from continued expansion of our prenatal, newborn and infectious disease screening solutions in key regions outside the United States, particularly in emerging markets such as China. In our medical imaging business, we had continued growth from our traditional diagnostic imaging offerings, as well as increased demand for our complementary metal-oxide-semiconductor (“CMOS”) imaging technology, particularly in the fields of mammography, dental and orthopedics. 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 creating better outcomes for patients, are increasingly valued and we expect to see continued growth in these markets.
In our Environmental Health segment, our laboratory services 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. During fiscal year 2012 , we had increased demand for our informatics offerings, and we continued to grow our laboratory services business by adding new customers to our OneSource multivendor service offering. Sales of environmental, food and consumer safety and testing products also grew in fiscal year 2012 , as compared to fiscal year 2011 , as increased regulations in environmental and food safety markets continued to drive demand for our analytical instrumentation and follow-on consumables, particularly in China and South America. We saw continued strength in our inorganic analysis solutions, such as our NexION ® mass spectrometer, as trace metals identification remains a critical component of contaminant detection for environmental, as well as food and consumer safety, applications. These increases were partially offset by decreased demand for our applications in the industrial markets. We believe these trends will continue as emerging contaminant testing protocols and corresponding regulations are developed, resulting in continued demand for efficient, analytically sensitive and information rich testing solutions.
Our consolidated gross margins increase d 135 basis points in fiscal year 2012 , as compared to fiscal year 2011 , due to the lower fiscal year 2012 mark-to-market charge for our postretirement benefit plans, increased sales volume, changes in product mix with growth in sales of higher gross margin product offerings and productivity improvements. Our consolidated operating

28
Table of Contents


margin decrease d 9 basis points in fiscal year 2012 , as compared to fiscal year 2011 , primarily due to the fiscal year 2012 pre-tax impairment charges of $74.2 million as a result of a review of certain of our trade names within our portfolio as part of a realignment of our marketing strategy and increased costs related to growth and productivity investments, partially offset by a lower fiscal year 2012 mark-to-market charge for our postretirement benefit plans, higher gross margins and cost containment and productivity initiatives.
We believe we are well positioned to continue to take advantage of the stable 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 strong foundation for continued growth.
 
Consolidated Results of Continuing Operations
 
Revenue
2012 Compared to 2011 .  Revenue for fiscal year 2012 was $2,115.2 million , as compared to $1,918.5 million for fiscal year 2011 , an increase of $196.7 million , or 10% , which includes an approximate 7% increase in revenue attributable to acquisitions and an approximate 2% decrease in revenue attributable to changes in foreign exchange rates. The analysis in the remainder of this paragraph compares segment revenue for fiscal year 2012 as compared to fiscal year 2011 and includes the effect of foreign exchange rate fluctuations and acquisitions. The total increase in revenue reflects a $159.7 million , or 18% , increase in our Human Health segment revenue, due to an increase in research market revenue of $110.9 million and an increase in diagnostics market revenue of $48.8 million . Our Environmental Health segment revenue increase d $37.0 million , or 4% , due to an increase in laboratory services market revenue of $47.2 million , partially offset by decrease s in environmental and industrial markets revenue of $10.2 million . As a result of adjustments to deferred revenue related to certain acquisitions required by business combination rules, we did not recognize $26.2 million of revenue primarily related to our informatics business in our Environmental Health segment for fiscal year 2012 and $30.8 million for fiscal year 2011 that otherwise would have been recorded by the acquired businesses during each of the respective periods.

2011 Compared to 2010 .  Revenue for fiscal year 2011 was $1,918.5 million , as compared to $1,701.8 million for fiscal year 2010 , an increase of $216.7 million , or 13% , which includes an approximate 5% increase in revenue attributable to acquisitions and an approximate 3% increase in revenue attributable to changes in foreign exchange rates. The analysis in the remainder of this paragraph compares segment revenue for fiscal year 2011 as compared to fiscal year 2010 and includes the effect of foreign exchange rate fluctuations and acquisitions. The total increase in revenue reflects a $90.7 million , or 11% , increase in our Human Health segment revenue, due to an increase in diagnostics market revenue of $52.3 million and an increase in research market revenue of $38.4 million . Our Environmental Health segment revenue increase d $126.1 million , or 14% , due to increase s in environmental and industrial markets revenue of $75.9 million , and an increase in laboratory services market revenue of $50.1 million . As a result of adjustments to deferred revenue related to certain acquisitions required by business combination rules, we did not recognize $30.8 million of revenue primarily related to our informatics business in our Environmental Health segment for fiscal year 2011 and $0.7 million for fiscal year 2010 that otherwise would have been recorded by the acquired businesses during each of the respective periods.
 
Cost of Revenue
2012 Compared to 2011 .  Cost of revenue for fiscal year 2012 was $1,152.0 million , as compared to $1,070.7 million for fiscal year 2011 , an increase of approximately $81.3 million , or 8% . As a percentage of revenue, cost of revenue decrease d to 54.5% in fiscal year 2012 from 55.8% in fiscal year 2011 , resulting in an increase in gross margin of approximately 135 basis points to 45.5% in fiscal year 2012 from 44.2% in fiscal year 2011 . Amortization of intangible assets decrease d and was $51.8 million for fiscal year 2012 , as compared to $53.4 million for fiscal year 2011 . The mark-to-market adjustment for postretirement benefit plans was a loss of $3.7 million for fiscal year 2012 , as compared to a loss of $4.2 million for fiscal year 2011 . Stock-based compensation expense increase d and was $1.3 million for fiscal year 2012 , as compared to $1.1 million for fiscal year 2011 . The amortization of purchase accounting adjustments to record the inventory from certain acquisitions added an expense of approximately $5.2 million for fiscal year 2012 , as compared to $4.1 million for fiscal year 2011 . In addition to the above, the increase in gross margin was primarily the result of increased sales volume, changes in product mix with growth in sales of higher gross margin product offerings and productivity improvements, partially offset by increased costs related to acquisitions.
 
2011 Compared to 2010 .  Cost of revenue for fiscal year 2011 was $1,070.7 million , as compared to $943.1 million for fiscal year 2010 , an increase of approximately $127.6 million , or 14% . As a percentage of revenue, cost of revenue increase d to 55.8% in fiscal year 2011 from 55.4% in fiscal year 2010 , resulting in a decrease in gross margin of approximately 39 basis points to 44.2% in fiscal year 2011 from 44.6% in fiscal year 2010 . Amortization of intangible assets increase d and was $53.4

29


million for fiscal year 2011 , as compared to $42.5 million for fiscal year 2010 . The mark-to-market adjustment for postretirement benefit plans was a loss of $4.2 million for fiscal year 2011 , as compared to a loss of $0.1 million for fiscal year 2010 . Stock-based compensation expense increase d and was $1.1 million for fiscal year 2011 , as compared to $0.9 million for fiscal year 2010 . The amortization of purchase accounting adjustments to record the inventory from certain acquisitions added an expense of approximately $4.1 million for fiscal year 2011 . In addition to the above, the decrease in gross margin was primarily the result of changes in product mix with growth in sales of lower gross margin product offerings and increased freight costs, partially offset by increased sales volume, productivity improvements and cost containment initiatives.
 
Selling, General and Administrative Expenses
2012 Compared to 2011 .  Selling, general and administrative expenses for fiscal year 2012 were $632.7 million , as compared to $624.4 million for fiscal year 2011 , an increase of approximately $8.3 million , or 1% . As a percentage of revenue, selling, general and administrative expenses decrease d and were 29.9% in fiscal year 2012 , compared to 32.5% in fiscal year 2011 . Amortization of intangible assets increase d and was $38.9 million for fiscal year 2012 , as compared to $25.9 million for fiscal year 2011 . The mark-to-market adjustment for postretirement benefit plans was a loss of $27.9 million for fiscal year 2012 , as compared to a loss of $62.9 million for fiscal year 2011 . Stock-based compensation expense increase d and was $19.0 million for fiscal year 2012 , as compared to $13.8 million for fiscal year 2011 . Acquisition related costs for integration, contingent consideration and other acquisition costs related to certain acquisitions added an expense of $0.3 million for fiscal year 2012 and $11.2 million for fiscal year 2011 . In addition to the above, the increase in selling, general and administrative expenses was primarily the result of costs related to acquisitions and growth and productivity investments, particularly in emerging territories, partially offset by cost containment initiatives.

2011 Compared to 2010 .  Selling, general and administrative expenses for fiscal year 2011 were $624.4 million , as compared to $487.3 million for fiscal year 2010 , an increase of approximately $137.1 million , or 28% . As a percentage of revenue, selling, general and administrative expenses increase d and were 32.5% in fiscal year 2011 , compared to 28.6% in fiscal year 2010 . Amortization of intangible assets increase d and was $25.9 million for fiscal year 2011 , as compared to $16.6 million for fiscal year 2010 . The mark-to-market adjustment for postretirement benefit plans was a loss of $62.9 million for fiscal year 2011 , as compared to a loss of $0.2 million for fiscal year 2010 . Stock-based compensation expense increase d and was $13.8 million for fiscal year 2011 , as compared to $11.2 million for fiscal year 2010 . The gain on the sale of a facility in Boston, Massachusetts that was damaged in a fire in March 2005 was $3.4 million for fiscal year 2010 . Acquisition related costs for integration, contingent consideration and other acquisition costs related to certain acquisitions added an expense of $11.2 million for fiscal year 2011 and $2.8 million for fiscal year 2010 . In addition to the above, the increase in selling, general and administrative expenses was primarily the result of costs related to acquisitions and increased sales and marketing expenses, particularly in emerging territories, partially offset by cost containment and productivity initiatives.
 
Research and Development Expenses
2012 Compared to 2011 .  Research and development expenses for fiscal year 2012 were $132.6 million , as compared to $115.8 million for fiscal year 2011 , an increase of $16.8 million , or 15% . As a percentage of revenue, research and development expenses increase d to 6.3% in fiscal year 2012 , as compared to 6.0% in fiscal year 2011 . Amortization of intangible assets decrease d and was $0.5 million for fiscal year 2012 , as compared to $0.7 million for fiscal year 2011 . The mark-to-market adjustment for postretirement benefit plans was a loss of $0.2 million for fiscal year 2012 , as compared to a loss of $0.8 million for fiscal year 2011 . Stock-based compensation expense increase d and was $0.8 million for fiscal year 2012 , as compared to $0.6 million for fiscal year 2011 . We have a broad product base, and we do not expect any single research and development project to have significant costs. We directed research and development efforts similarly during fiscal years 2012 and 2011 , primarily toward the diagnostics and research markets within our Human Health segment, and the environmental, and laboratory service and support markets within our Environmental Health segment, in order to help accelerate our growth initiatives.
 
2011 Compared to 2010 .  Research and development expenses for fiscal year 2011 were $115.8 million , as compared to $94.8 million for fiscal year 2010 , an increase of $21.0 million , or 22% . As a percentage of revenue, research and development expenses increase d to 6.0% in fiscal year 2011 , as compared to 5.6% in fiscal year 2010 . Amortization of intangible assets decrease d and was $0.7 million for fiscal year 2011 , as compared to $1.6 million for fiscal year 2010 . The mark-to-market adjustment for postretirement benefit plans was a loss of $0.8 million for fiscal year 2011 , as compared to a minimal gain for fiscal year 2010 . Stock-based compensation expense increase d and was $0.6 million for fiscal year 2011 , as compared to $0.5 million for fiscal year 2010 . We directed research and development efforts similarly during fiscal years 2011 and 2010 , primarily toward the diagnostics and research markets within our Human Health segment, and the environmental, and laboratory service and support markets within our Environmental Health segment, in order to help accelerate our growth initiatives.
 

30


Restructuring and Contract Termination Charges, Net
We have undertaken a series of restructuring actions related to the impact of acquisitions and divestitures, alignment with our growth strategy and the integration of our business units. Restructuring and contract termination charges, net, for fiscal year 2012 were a $25.1 million charge, as compared to a $13.5 million charge for fiscal year 2011 and an $19.0 million charge for fiscal year 2010 .
 
The following table summarizes our restructuring and contract termination accrual balances and related activity by restructuring plan, as well as contract termination, during fiscal years 2012, 2011, and 2010 :
 
 
Balance
at
01/03/2010
 
2010
Charges
and
Changes
in
Estimates,
net
 
2010
Reclassi-
fication
of
Deferred
Gain
 
2010
Amounts
paid
 
Balance
at
01/02/2011
 
2011
Charges
and
Changes
in
Estimates,
net
 
2011
Amounts
paid
 
2011
Acquired Accruals
 
Balance
at
01/01/2012
 
2012
Charges
and
Changes
in
Estimates,
net
 
2012
Amounts
paid
 
Balance
at
12/30/2012
Previous Plans
$
14,350

 
$
18,893

 
$
2,983

 
$
(13,615
)
 
$
22,611

 
$
(1,081
)
 
$
(10,866
)
 
$
3,829

 
$
14,493

 
$
(506
)
 
$
(4,032
)
 
$
9,955

Q2 2011 Plan
—

 
—

 
—

 
—

 
—

 
5,586

 
(4,303
)
 
—

 
1,283

 
(216
)
 
(504
)
 
563

Q4 2011 Plan
—

 
—

 
—

 
—

 
—

 
6,975

 
(1,931
)
 
—

 
5,044

 
(135
)
 
(4,375
)
 
534

Q1 2012 Plan
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
6,394

 
(5,113
)
 
1,281

Q2 2012 Plan
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
7,422

 
(2,836
)
 
4,586

Q3 2012 Plan
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
7,772

 
(219
)
 
7,553

Q4 2012 Plan
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2,936

 
(254
)
 
2,682

Restructuring
14,350

 
18,893

 
2,983

 
(13,615
)
 
22,611

 
11,480

 
(17,100
)
 
3,829

 
20,820

 
23,667

 
(17,333
)
 
27,154

Contract termination charges
2,082

 
70

 
—

 
(1,666
)
 
486

 
1,972

 
(391
)
 
—

 
2,067

 
1,470

 
(2,941
)
 
596

Total restructuring and termination charges
$
16,432

 
$
18,963

 
$
2,983

 
$
(15,281
)
 
$
23,097

 
$
13,452

 
$
(17,491
)
 
$
3,829

 
$
22,887

 
$
25,137

 
$
(20,274
)
 
$
27,750

 
The restructuring plans for the fourth quarter of fiscal year 2012 and fourth and second quarter of fiscal year 2011 were intended principally to shift resources to higher growth geographic regions and end markets. The restructuring plan for the third quarter of fiscal year 2012 was intended to shift certain of our operations into a newly established shared service center. The restructuring plans for the first and second quarters of fiscal year 2012 were intended principally to realign operations, research and development resources, and production resources as a result of recent acquisitions. The activities associated with these plans have been reported as restructuring expenses and are included as a component of operating expenses from continuing operations. We expect the impact of immediate cost savings from the restructuring plans on operating results and cash flows to approximately offset the increased spending required to realign operations. We expect the impact of future cost savings from these restructuring activities on operating results and cash flows will exceed $11.0 million on an annual basis beginning in fiscal year 2014, primarily as decreases to cost of revenue and selling, general and administrative expenses.
 
Q4 2012 Restructuring Plan
 
During the fourth quarter of fiscal year 2012, our management approved a plan to shift resources to higher growth geographic regions and end markets (the “Q4 2012 Plan”). As a result of the Q4 2012 Plan, we recognized a $0.6 million pre-tax restructuring charge in the Human Health segment related to a workforce reduction from reorganization activities and recognized a $2.4 million pre-tax restructuring charge in the Environmental Health segment related to a workforce reduction from reorganization activities.
 
As part of the Q4 2012 Plan, we reduced headcount by 54 employees. All employees were notified of termination by December 30, 2012, and we anticipate that the remaining severance payments of $2.7 million for workforce reductions will be completed by the end of the second quarter of fiscal year 2014.
 
The following table summarizes the components of our Q4 2012 Plan activity recognized by segment:
 
 
Human Health
 
Environmental
Health
 
Total
 
(In thousands)
Severance
$
562

 
$
2,374

 
$
2,936



31


Q3 2012 Restructuring Plan
 
During the third quarter of fiscal year 2012, our management approved a plan to shift certain of our operations into a newly established shared service center (the “Q3 2012 Plan”). As a result of the Q3 2012 Plan, we recognized $3.7 million pre-tax restructuring charges in each of the Human Health and Environmental Health segments related to a workforce reduction from reorganization activities. During fiscal year 2012 , we also recorded an additional pre-tax restructuring accrual of $0.3 million relating to the Q3 2012 plan due to higher than expected costs associated with the workforce reduction from reorganization activities within both the Human Health and Environmental Health segments.
 
As part of the Q3 2012 Plan, we will reduce headcount by 66 employees. All employees were notified of termination by September 30, 2012, and we anticipate that the remaining severance payments of $7.6 million for workforce reductions will be completed by the end of the fourth quarter of fiscal year 2015.
 
The following table summarizes the components of our Q3 2012 Plan activity recognized by segment:
 
 
Human Health
 
Environmental
Health
 
Total
 
(In thousands)
Severance
$
3,881

 
$
3,891

 
$
7,772


Q2 2012 Restructuring Plan
 
During the second quarter of fiscal year 2012, our management approved a plan to realign operations, research and development resources, and production resources as a result of recent acquisitions (the “Q2 2012 Plan”). As a result of the Q2 2012 Plan, we recognized a $7.2 million pre-tax restructuring charge in the Human Health segment related to a workforce reduction from reorganization activities and recognized a $0.2 million pre-tax restructuring charge in the Environmental Health segment related to a workforce reduction from reorganization activities throughout fiscal year 2012. We expect to recognize an additional $2.2 million of incremental restructuring expense in future periods as services are provided for one-time termination benefits in which the employee is required to render service until termination in order to receive the benefits. Such benefits will be recognized ratably over the required service period.
 
As part of the Q2 2012 Plan, we will reduce headcount by 205 employees. All employees were notified of termination by July 1, 2012, and we anticipate that the remaining severance payments of $4.6 million for workforce reductions will be completed by the end of the second quarter of fiscal year 2014.
 
The following table summarizes the components of our Q2 2012 Plan activity recognized by segment:
 
 
Human Health
 
Environmental
Health
 
Total
 
(In thousands)
Severance
$
7,180

 
$
242

 
$
7,422


Q1 2012 Restructuring Plan
 
During the first quarter of fiscal year 2012, our management approved a plan to realign operations and production resources as a result of recent acquisitions (the “Q1 2012 Plan”). As a result of the Q1 2012 Plan, we recognized a $5.4 million pre-tax restructuring charge in the Human Health segment related to a workforce reduction from reorganization activities and the closure of excess facility space and recognized a $1.0 million pre-tax restructuring charge in the Environmental Health segment related to a workforce reduction from reorganization activities throughout fiscal year 2012. We expect to recognize no additional incremental restructuring expense in future periods as all services were provided for one-time termination benefits in which the employee was required to render service until termination in order to receive the benefits.
 
As part of the Q1 2012 Plan, we will reduce headcount by 112 employees. All employees were notified of termination and actions related to the closure of excess facility space were completed by April 1, 2012, and we anticipate that the remaining severance payments of $1.3 million for workforce reductions will be completed by the end of the fourth quarter of fiscal year 2013. No remaining payments exist for the closure of the excess facility space.
 

32


The following table summarizes the components of our Q1 2012 Plan activity recognized by segment:
 
 
Human Health
 
Environmental
Health
 
Total
 
(In thousands)
Severance
$
5,294

 
$
1,021

 
$
6,315

Closure of excess facility space
79

 
—

 
79

Total
$
5,373

 
$
1,021

 
$
6,394


Q4 2011 Restructuring Plan
 
During the fourth quarter of fiscal year 2011, our management approved a plan to shift resources to higher growth geographic regions and end markets (the “Q4 2011 Plan”). As a result of the Q4 2011 Plan, we recognized a $2.3 million pre-tax restructuring charge in the Human Health segment related to a workforce reduction from reorganization activities and recognized a $4.6 million pre-tax restructuring charge in the Environmental Health segment related to a workforce reduction from reorganization activities and the closure of excess facility space. During fiscal year 2012 , we recorded a pre-tax restructuring reversal of $0.1 million relating to the Q4 2011 Plan due to a reduction in the estimated costs associated with the closure of an excess facility in the Environmental Health segment.
 
As part of the Q4 2011 Plan, we reduced headcount by 114 employees. All employees were notified of termination and actions related to the closure of excess facility space were completed by January 1, 2012, and we anticipate that the remaining severance payments of $0.5 million for workforce reductions will be completed by the end of the second quarter of fiscal year 2013. No remaining payments exist for the closure of the excess facility space.
 
The following table summarizes the components of our Q4 2011 Plan activity recognized by segment:
 
 
Human Health
 
Environmental
Health
 
Total
 
(In thousands)
Severance
$
2,257

 
$
4,348

 
$
6,605

Closure of excess facility space
—

 
235

 
235

Total
$
2,257

 
$
4,583

 
$
6,840

 
Q2 2011 Restructuring Plan
 
During the second quarter of fiscal year 2011, our management approved a plan to shift resources to higher growth geographic regions and end markets (the “Q2 2011 Plan”). As a result of the Q2 2011 Plan, we recognized a $2.2 million pre-tax restructuring charge in the Human Health segment related to a workforce reduction from reorganization activities and the closure of excess facility space and also recognized a $3.4 million pre-tax restructuring charge in the Environmental Health segment related to a workforce reduction from reorganization activities and the closure of excess facility space. During the fiscal year 2012 , we recorded a reversal of the pre-tax restructuring accrual of $0.2 million relating to the Q2 2011 Plan due to lower than expected costs associated with the workforce reduction from reorganization activities within the Environmental Health segment.
 
As part of the Q2 2011 Plan, we reduced headcount by 72 employees. All employees were notified of termination and actions related to the closure of excess facility space were completed by July 3, 2011, and we anticipate that the remaining severance payments of $0.6 million for workforce reductions will be completed by the end of the second quarter of fiscal year 2013. No remaining payments exist for the closure of the excess facility space.
 

33


The following table summarizes the components of our Q2 2011 Plan activity recognized by segment:
 
 
Human Health
 
Environmental
Health
 
Total
 
(In thousands)
Severance
$
1,498

 
$
3,213

 
$
4,711

Closure of excess facility space
659

 
—

 
659

Total
$
2,157

 
$
3,213

 
$
5,370

 
Previous Restructuring and Integration Plans

The principal actions of the restructuring and integration plans from fiscal years 2001 through 2010 were workforce reductions related to the integration of our businesses in order to reduce costs and achieve operational efficiencies as well as workforce reductions in both the Human Health and Environmental Health segments by shifting resources into geographic regions and end markets that are more consistent with our growth strategy. During fiscal year 2012 , we paid $4.0 million related to these plans and recorded an additional charge of $0.2 million related to higher than expected costs associated with workforce reductions in Europe within the Human Health segment, as well as a reversal of $0.7 million primarily related to a reduction in the estimated sublease rental payments reasonably expected to be obtained for an excess facility in Europe within the Environmental Health segment. As of December 30, 2012 , we had approximately $10.0 million of remaining liabilities associated with these restructuring and integration plans, primarily for residual lease obligations related to closed facilities and remaining severance payments for workforce reductions in both the Human Health and Environmental Health segments. We expect to make payments for these leases, the terms of which vary in length, through fiscal year 2022.

Contract Termination Charges

We have 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. We recorded a pre-tax charge of $1.5 million in fiscal year 2012 , a pre-tax charge of $2.0 million in fiscal year 2011 and a pre-tax charge of $0.1 million in fiscal year 2010 , primarily as a result of terminating various contractual commitments in our Environmental Health segment. We made payments for these obligations of $2.9 million during fiscal year 2012 , $0.4 million during fiscal year 2011 , and $1.7 million during fiscal year 2010 . The remaining balance of these accruals as of December 30, 2012 was $0.6 million .
 
Impairment of Assets
2012 Compared to 2011 .  Impairment of assets was $74.2 million in fiscal year 2012 , as compared to $3.0 million in fiscal year 2011 . As part of integrating our recent acquisitions, in the fourth quarter of fiscal year 2012, we decided that prospectively we would primarily focus on the PerkinElmer trade name. Accordingly, we undertook a review of certain of our trade names within our portfolio as part of a realignment of our marketing strategy, which resulted in pre-tax impairment charges of $74.2 million in fiscal year 2012. We recognized $54.3 million pre-tax impairment charges in the Human Health segment and also recognized $19.9 million pre-tax impairment charges in the Environmental Health segment. Additional information regarding this impairment is discussed in Note 12 to our consolidated financial statements included in this annual report on Form 10-K.
 
2011 Compared to 2010 .  Impairment of assets was $3.0 million in fiscal year 2011 , as compared to zero in fiscal year 2010 . The fiscal year 2011 pre-tax impairment charge was $3.0 million for the impairment of intangible assets within our Human Health segment for the full impairment of license agreements, that we no longer intend to use.
 

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Interest and Other Expense (Income), Net
Interest and other expense (income), net, consisted of the following:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Interest income
$
(747
)
 
$
(1,884
)
 
$
(832
)
Interest expense
45,787

 
24,783

 
15,891

Gains on step acquisition
—

 
—

 
(25,586
)
Other expense, net
2,916

 
3,875

 
2,144

Total interest and other expense (income), net
$
47,956

 
$
26,774

 
$
(8,383
)
 
2012 Compared to 2011 .  Interest and other expense (income), net, for fiscal year 2012 was an expense of $48.0 million , as compared to an expense of $26.8 million for fiscal year 2011 , an increase of $21.2 million . The increase in interest and other expense (income), net, in fiscal year 2012 as compared to fiscal year 2011 was primarily due to higher debt balances and an increase of fixed rate debt to partially fund the Caliper acquisition in fiscal year 2011. Interest expense increase d by $21.0 million in fiscal year 2012 as compared to fiscal year 2011 , primarily due to the increased debt and the higher interest rates on those debt balances associated with the issuance of the 2021 Notes. Interest income decrease d by $1.1 million in fiscal year 2012 as compared to fiscal year 2011 , primarily due to lower cash balances and lower interest rates on invested cash. For fiscal year 2011 , acquisition related financing costs related to certain acquisitions added expense of $3.1 million , and is included in interest expense. Other expenses for fiscal year 2012 as compared to fiscal year 2011 decrease d by $1.0 million , and consisted primarily of expenses related to foreign currency transactions and translation of non-functional currency assets and liabilities. A more complete discussion of our liquidity is set forth below under the heading “Liquidity and Capital Resources.”
 
2011 Compared to 2010 .  Interest and other expense (income), net, for fiscal year 2011 was an expense of $26.8 million , as compared to income of $8.4 million for fiscal year 2010 , an increase of $35.2 million . The increase in interest and other expense (income), net, in fiscal year 2011 as compared to fiscal year 2010 was primarily due to the pre-tax gain of $25.6 million recognized during fiscal year 2010 related to the required re-measurement to fair value of our previously held equity interest in the ICPMS Joint Venture and other related tangible assets. Interest expense increase d by $8.9 million in fiscal year 2011 as compared to fiscal year 2010 , primarily due to the increased debt and the higher interest rates on those debt balances with the issuance of the 2021 Notes. Interest income increase d by $1.1 million in fiscal year 2011 as compared to fiscal year 2010 , primarily due to higher cash balances. For fiscal year 2011 , acquisition related financing costs related to certain acquisitions added expense of $3.1 million , and is included in interest expense. Other expenses for fiscal year 2011 as compared to fiscal year 2010 increase d by $1.7 million , and consisted primarily of expenses related to foreign currency transactions and translation of non-functional currency assets and liabilities.
 
(Benefit from) Provision for Income Taxes
2012 Compared to 2011 .  The fiscal year 2012 benefit from income taxes on continuing operations was $17.9 million , as compared to a provision of $63.2 million for fiscal year 2011 . The effective tax rate on continuing operations was a benefit of 35.3% for fiscal year 2012 as compared to a provision of 98.2% for fiscal year 2011 . The benefit from income taxes in fiscal year 2012 was primarily due to a tax benefit of $7.0 million related to discrete items and losses in higher tax rate jurisdictions, which included the pre-tax impairment charges of $74.2 million , partially offset by a provision from income taxes related to profits in lower tax rate jurisdictions. The fiscal year 2011 provision for incomes taxes includes an additional provision of $79.7 million related to our planned $350.0 million repatriation of previously unremitted earnings.
 
2011 Compared to 2010 .  The fiscal year 2011 provision for income taxes on continuing operations was $63.2 million , as compared to a provision of $27.0 million for fiscal year 2010 . The effective tax rate on continuing operations was 98.2% for fiscal year 2011 as compared to 16.3% for fiscal year 2010 . The higher effective tax rate in fiscal year 2011 as compared to fiscal year 2010 was primarily due to (i) a provision of $79.7 million in fiscal year 2011 related to our planned $350.0 million repatriation of previously unremitted earnings, partially offset by (ii) changes in the geographic distribution of profits, with increases in lower tax rate jurisdictions.
 
Discontinued Operations
As part of our continuing efforts to focus on higher growth opportunities, we have discontinued certain businesses. We have accounted for these businesses as discontinued operations and, accordingly, have presented the results of operations and related cash flows as discontinued operations for all periods presented. The assets and liabilities of these businesses have been presented separately, and are reflected within the assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of December 30, 2012 and January 1, 2012 .

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We recorded the following pre-tax gains and losses, which have been reported as a net gain on disposition of discontinued operations during the three fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
(Loss) gain on disposition of Illumination and Detection Solutions business
$
(57
)
 
$
(1,787
)
 
$
315,324

Gain (loss) on disposition of Photoflash business
2,459

 
(134
)
 
4,369

Net gain (loss) on disposition of other discontinued operations
3

 
3,920

 
(1,797
)
Net gain on disposition of discontinued operations before income taxes
$
2,405

 
$
1,999

 
$
317,896

 
In November 2010, we sold our IDS business, which was included in the Environmental Health segment, for $510.3 million including an adjustment for net working capital, to reduce the complexity of our product offerings and organizational structure, and to provide capital to reinvest in other Human Health and Environmental Health end markets. The buyer acquired our IDS business through the purchase of all outstanding stock of certain of our subsidiaries located in Germany, Canada, China, Indonesia, the Philippines, the United Kingdom and the United States as well as the purchase of related assets and the assumption of liabilities held by us and certain of our subsidiaries located in Singapore and Germany. We recognized a pre-tax gain of $315.3 million , inclusive of the net working capital adjustment, in the fourth quarter of fiscal year 2010 as a result of the sale of our IDS business. During fiscal year 2011, we updated the net working capital adjustment associated with the sale of this business and other potential contingencies, which resulted in the recognition of a pre-tax loss of $1.8 million . These gains and losses were recognized as gain (loss) on disposition of discontinued operations.
 
In December 2008, our management approved a plan to divest our Photoflash business within our Environmental Health segment. In June 2010, we sold the Photoflash business for $13.5 million , including an adjustment for net working capital, plus potential additional contingent consideration. We recognized a pre-tax gain of $4.4 million , inclusive of the net working capital adjustment, in fiscal year 2010 as a result of the sale. During fiscal year 2012, we recognized a pre-tax gain of $2.5 million for contingent consideration related to this sale. These gains were recognized as a gain on disposition of discontinued operations.
 
During fiscal years 2012, 2011, and 2010 , we settled various commitments related to the divestiture of other discontinued operations. We recognized a pre-tax gain of $3.9 million in fiscal year 2011 and a pre-tax loss of $1.8 million in fiscal year 2010 . The fiscal year 2011 pre-tax gain included $4.0 million for contingent consideration related to the sale of our semiconductor business in fiscal year 2006.
 
Summary pre-tax operating results of the discontinued operations for the periods prior to disposition were as follows for the fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Revenue
$
—

 
$
—

 
$
288,713

Costs and expenses
—

 
—

 
257,281

Operating income from discontinued operations
—

 
—

 
31,432

Other expenses, net
—

 
—

 
660

Income from discontinued operations before income taxes
$
—

 
$
—

 
$
30,772

 
We recognized a tax provision of $0.9 million on discontinued operations in fiscal year 2012 , a tax benefit of $4.5 million on discontinued operations in fiscal year 2011 and a tax provision of $96.6 million in fiscal year 2010 on discontinued operations. The recognition of $4.5 million income tax benefit in fiscal year 2011 is primarily the net result of a change in estimate related to the federal income tax liability associated with the repatriation of the unremitted earnings of the IDS and Photoflash businesses, as further described in Note 6 to the consolidated financial statements in this annual report on Form 10-K, offset by the tax provision on the contingent consideration received in fiscal year 2011 related to the sale of our semiconductor business in fiscal year 2006. The recognition of $96.6 million income tax expense in fiscal year 2010 includes $16.0 million of income tax expense associated with unremitted earnings of directly-owned foreign subsidiaries that no longer qualified as indefinitely reinvested once the subsidiary was held for sale, and $65.8 million related to the federal income tax liability associated with the repatriation of the unremitted earnings of the IDS and Photoflash businesses, as further described in Note 6 to the consolidated financial statements in this annual report on Form 10-K.

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Business Combinations
Acquisition of Haoyuan Biotech Co., Ltd.  In November 2012, we acquired all outstanding stock of Haoyuan. Haoyuan is a provider of nucleic acid-based blood screening solutions for the blood banking and clinical diagnostics markets. We expect this acquisition to extend our capabilities into nucleic acid blood screening, as well as deepen our position in the growing molecular clinical diagnostics market in China. We paid the shareholders of Haoyuan $38.0 million in cash for the stock of Haoyuan. We recorded a receivable of $2.7 million from the shareholders of Haoyuan as a reduction of purchase price for the settlement of certain contingencies. As of the closing date, we potentially had to pay the shareholders additional contingent consideration of up to $30.0 million , which at closing had an estimated fair value of $1.9 million . The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to us, 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. We reported the operations for this acquisition within the results of our Human Health segment from the acquisition date.
 
Acquisition of Caliper Life Sciences, Inc.  In November 2011, we acquired all of the outstanding stock of Caliper. Caliper is a provider of imaging and detection solutions for life sciences research, diagnostics and environmental markets. Caliper develops and sells integrated systems, consisting of instruments, software, reagents, laboratory automation tools, and assay development and discovery services, primarily to pharmaceutical, biotechnology, and diagnostics companies, and government and other not-for-profit research institutions. We expect this acquisition to enhance our molecular imaging and detection technologies and to complement our offerings in life science, diagnostics, environmental and food markets. We paid the shareholders of Caliper $646.3 million in cash for the stock of Caliper. We financed the acquisition by issuing $500.0 million aggregate principal amount of senior unsecured notes due 2021 in a registered public offering and received approximately $496.9 million of net proceeds from the issuance, with the remainder of the purchase price paid from available cash. The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to us, 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. We have reported the operations for this acquisition within the results of our Human Health segment from the acquisition date.
 
Acquisition of Dexela Limited.  In June 2011, we acquired all of the outstanding stock of Dexela Limited ("Dexela"). Dexela is a provider of flat panel CMOS x-ray detection technologies and services. We expect this acquisition to expand our current medical imaging portfolio in key areas including surgery, dental, cardiology and mammography, as well as non-destructive testing. With the addition of the CMOS technology to our imaging portfolio, customers will be able to choose between two complementary x-ray detector technologies to optimize their system performance and meet their specific application needs. We paid the shareholders of Dexela $26.1 million in cash for the stock of Dexela. As of the closing date, we potentially had to pay additional contingent consideration of up to $12.2 million , which at closing had an estimated fair value of $4.6 million . The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to us, 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. We have reported the operations for this acquisition within the results of our Human Health segment from the acquisition date.
 
Acquisition of Labtronics, Inc.  In May 2011, we acquired all of the outstanding stock of Labtronics, Inc. ("Labtronics"). Labtronics is a provider of procedures-based Electronic Laboratory Notebook (“ELN”) solutions for laboratories performing routine analysis in multiple industries. We expect this acquisition to extend our ELN and data integration software offerings into laboratories following strict routine procedures, late stage product or method development laboratories and environmental and food testing laboratories. Labtronics tools can be applied to procedure-based problems, including laboratory analysis, equipment calibration and validation, cleaning validation and other problems. We paid the shareholders of Labtronics $11.4 million in cash for the stock of Labtronics. The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to us, 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. We have reported the operations for this acquisition within the results of our Environmental Health segment from the acquisition date.
 
Acquisition of Geospiza, Inc.  In May 2011, we acquired all of the outstanding stock of Geospiza, Inc. ("Geospiza"). Geospiza is a developer of software systems for the management of genetic analysis and laboratory workflows. Geospiza primarily services biotechnology and pharmaceutical companies, universities, researchers, contract core and diagnostic laboratories involved in genetic testing and manufacturing bio-therapeutics by meeting their combined laboratory, data management and analytical needs. We expect this acquisition to enhance our software offerings, which will enable researchers to explore the genomic origins of disease effectively, and help address customers’ growing needs to manage knowledge and improve scientific productivity. We paid the shareholders of Geospiza $13.2 million in cash for the stock of Geospiza. The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to us,

37


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. We have reported the operations for this acquisition within the results of our Human Health segment from the acquisition date.
 
Acquisition of CambridgeSoft Corporation.  In April 2011, we acquired all of the outstanding stock of CambridgeSoft Corporation ("CambridgeSoft"). CambridgeSoft is a provider of discovery, collaboration and knowledge enterprise solutions, scientific databases and professional services. CambridgeSoft primarily services pharmaceutical, biotechnology and chemical industries with solutions that help customers create, analyze and communicate scientific data while improving the speed, quality, efficiency and predictability of research and development investments. We expect this acquisition to enhance our focus on knowledge management in laboratory settings by expanding our software offerings, enabling customers to share data used for scientific decisions. We paid the shareholders of CambridgeSoft $227.4 million in cash at the closing for the stock of CambridgeSoft and recorded a receivable of $4.2 million from the shareholders of CambridgeSoft as a reduction of purchase price for the settlement of contingencies. During the fourth quarter of fiscal year 2012 , we settled the contingencies and collected the receivable. The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to us, 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. We have reported the operations for this acquisition within the results of our Environmental Health segment from the acquisition date.
 
Acquisition of ID Biological Systems, Inc.  In March 2011, we acquired specified assets and assumed specified liabilities of ID Biological Systems, Inc. ("IDB"). IDB is a manufacturer of filter paper-based sample collection devices for neonatal screening and prenatal diagnostics. We expect this acquisition to enhance our market position in the prenatal and neonatal markets. We paid $7.7 million in cash at the closing for this transaction. As of the closing date, we potentially had to pay additional contingent consideration of up to $3.3 million , which at closing had an estimated fair value of $0.3 million . The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to us, as well as non-capitalizable intangible assets, such as the employee workforce acquired, and has been allocated to goodwill, all of which is tax deductible. We have reported the operations for this acquisition within the results of our Human Health segment from the acquisition date.
 
Acquisition of ArtusLabs, Inc.  In March 2011, we acquired all of the outstanding stock of ArtusLabs, Inc. ("ArtusLabs"). ArtusLabs offers the Ensemble ® scientific knowledge platform, to accelerate research and development in the pharmaceutical, chemical, petrochemical and related industries. Ensemble ® integrates disparate data from customers’ ELNs and informatics systems and databases. We expect this acquisition to enhance our focus on knowledge management in laboratory settings by expanding our informatics offerings, enabling customers to rapidly access enterprise-wide data. We paid the shareholders of ArtusLabs $15.2 million in cash at the closing for the stock of ArtusLabs. As of the closing date, we potentially had to pay additional contingent consideration of up to $15.0 million , which at closing had an estimated fair value of $7.5 million . The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to us, 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. We have reported the operations for this acquisition within the results of our Environmental Health segment from the acquisition date.
 
Acquisition of chemagen Biopolymer-Technologie AG.  In February 2011, we acquired all of the outstanding stock of chemagen Biopolymer-Technologie AG ("chemagen"). chemagen manufactures and sells nucleic acid sample preparation systems and reagents utilizing magnetic bead technology. We expect this acquisition to enhance our diagnostics business by expanding our product offerings to diagnostics, academic and industrial end markets. We paid the shareholders of chemagen $34.6 million in cash for the stock of chemagen. As of the closing date, we potentially had to pay additional contingent consideration of up to $20.3 million , which at closing had an estimated fair value of $7.7 million . The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to us, 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. We have reported the operations for this acquisition within the results of our Human Health segment from the acquisition date.
 
We do not consider the acquisitions completed during fiscal years 2012 and 2011 , with the exception of the Caliper acquisition, to be material to our consolidated results of operations; therefore, we are not presenting pro forma financial information of operations. The aggregate revenue and results of operations for Haoyuan for the period from the acquisition date to December 30, 2012 were minimal. The aggregate revenue for the acquisitions, with the exception of Caliper, completed during fiscal year 2011 for the period from their respective acquisition dates to January 1, 2012 was $32.4 million . We have also determined that the presentation of the results of operations for each of those acquisitions, from the date of acquisition, is impracticable due to the integration of the operations upon acquisition.
 

38


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 revenue thresholds or product development milestones achieved through given dates, 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. We may have to pay contingent consideration, related to all acquisitions with open contingency periods, of up to $61.3 million as of December 30, 2012 . As of December 30, 2012 , we had recorded contingent consideration obligations relating to our acquisitions of Dexela and Haoyuan, with an estimated fair value of $3.0 million . The earnout periods for each of these acquisitions do not exceed three years from the acquisition date. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the consolidated financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of definite-lived intangible assets, or the recognition of additional consideration which would be expensed.
 
In connection with the purchase price allocations for acquisitions, we estimate the fair value of deferred revenue assumed with our acquisitions. The estimated fair value of deferred revenue is determined by the legal performance obligation at the date of acquisition, and is generally based on the nature of the activities to be performed and the related costs to be incurred after the acquisition date. The fair value of an assumed liability related to deferred revenue is estimated based on the current market cost of fulfilling the obligation, plus a normal profit margin thereon. The estimated costs to fulfill the deferred revenue are based on the historical direct costs related to providing the services. We do not include any costs associated with selling effort, research and development, or the related fulfillment margins on these costs. In most acquisitions, profit associated with selling effort is excluded because the acquired businesses would have concluded the selling effort on the support contracts prior to the acquisition date. The estimated research and development costs are not included in the fair value determination, as these costs are not deemed to represent a legal obligation at the time of acquisition. The sum of the costs and operating income approximates, in theory, the amount that we would be required to pay a third-party to assume the obligation.
 
As of December 30, 2012 , with the exception of the purchase price allocation for the Haoyuan acquisition, the purchase price allocations for acquisitions completed in fiscal years 2012 and 2011 were final. The preliminary allocation of the purchase price for the Haoyuan acquisition was based upon an initial valuation and our estimates and assumptions underlying the initial valuation are subject to change within the measurement period (up to one year from the acquisition date). The primary areas of the preliminary purchase price allocation 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. We expect to continue to obtain information to assist in determining the fair values of the net assets acquired at the acquisition date during the measurement period. During the measurement period, we will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. Adjustments to the preliminary allocation of the purchase price during the measurement period require the revision of comparative prior period financial information when reissued in subsequent financial statements. The effect of any measurement period adjustments to the allocation of the purchase price made during the measurement period would be as if the adjustments had been completed on the acquisition date. The effects of such adjustments, if material, will cause changes in depreciation, amortization, or other income or expense recognized in prior periods. All changes that do not qualify as adjustments made during the measurement period are included in current period earnings.

Contingencies, Including Tax Matters
We are conducting a number of environmental investigations and remedial actions at our current and former locations and, along with other companies, have been named a potentially responsible party (“PRP”) for certain waste disposal sites. We accrue for environmental issues in the accounting period that our responsibility is established and when the cost can be reasonably estimated. We have accrued $6.1 million as of December 30, 2012 , which represents our management’s estimate of the total cost of the ultimate remediation of known environmental matters, and does not include any potential liability for related personal injury or property damage claims. This amount is not discounted and does not reflect the recovery of any amounts through insurance or indemnification arrangements. These 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 we have been named a PRP, our management does not currently anticipate any

39


additional liability to result from the inability of other significant named parties to contribute. We expect 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 our consolidated financial statements. While it is possible that a loss exceeding the amounts recorded in the consolidated financial statements may be incurred, the potential exposure is not expected to be materially different from those amounts recorded.
 
Enzo Biochem, Inc. and Enzo Life Sciences, Inc. (collectively, “Enzo”) filed a complaint dated October 23, 2002 in the United States District Court for the Southern District of New York, Civil Action No. 02-8448, seeking injunctive and monetary relief against Amersham plc, Amersham BioSciences, PerkinElmer, Inc., PerkinElmer Life Sciences, Inc., Sigma-Aldrich Corporation, Sigma Chemical Company, Inc., Molecular Probes, Inc., and Orchid BioSciences, Inc. The complaint alleges that we breached our 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, separately and together with the other defendants. We filed an answer and a counterclaim alleging that Enzo’s patents are invalid. In 2007, after the court issued a decision in 2006 regarding the construction of the claims in Enzo’s patents that effectively limited the coverage of certain of those claims and, we believe, excluded certain of our products from the coverage of Enzo’s patents, summary judgment motions were filed by the defendants. The case was assigned to a new district court judge in January 2009 and in March 2009, the new judge denied the pending summary judgment motions without prejudice and ordered a stay of the case until the federal appellate court decided Enzo’s appeal of the judgment of the United States District Court for the District of Connecticut in Enzo Biochem vs. Applera Corp. and Tropix, Inc. (the “Connecticut Case”), which involved a number of the same patents and which could materially affect the scope of Enzo’s case against us. In March 2010, the United States Court of Appeals for the Federal Circuit affirmed-in-part and reversed-in-part the judgment in the Connecticut Case. The district court permitted us and the other defendants to jointly file a motion for summary judgment on certain patent and other issues common to all of the defendants. On September 12, 2012, the court granted in part and denied in part our motion for summary judgment of non-infringement. On December 21, 2012, we filed a second motion for summary judgment on claims that were not addressed in the first motion. The second motion is pending. The district court has permitted Enzo to take limited discovery directed to the motion with briefing to be concluded in May 2013.
 
We believe we have meritorious defenses to the matter described above, and we are contesting the action vigorously. While this matter is subject to uncertainty, in the opinion of our management, based on its review of the information available at this time, the resolution of this matter will not have a material adverse effect on our consolidated financial statements included in this annual report on Form 10-K.
 
Tax years after 2005 remain open to examination by various tax jurisdictions in which we have significant business operations, such as Singapore, China, Finland, Germany, Netherlands, the United Kingdom, Italy and the United States. The tax years under examination vary by jurisdiction. We regularly review our tax positions in each significant taxing jurisdiction in the process of evaluating our unrecognized tax benefits. We make adjustments to our 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; and/or (iii) the statute of limitations expires regarding a tax position.
 
We are also subject to various other claims, legal proceedings and investigations covering a wide range of matters that arise in the ordinary course of our business activities. Although we have established accruals for potential losses that we believe are probable and reasonably estimable, in the opinion of our management, based on its review of the information available at this time, the total cost of resolving these other contingencies at December 30, 2012 should not have a material adverse effect on our consolidated financial statements included in this annual report on Form 10-K. However, each of these matters is subject to uncertainties, and it is possible that some of these matters may be resolved unfavorably to us.
 
Reporting Segment Results of Continuing Operations
We announced a new alignment of our businesses effective for fiscal year 2013 that will allow us to implement our strategy and propel our vision to improve global health by innovating technologies that help make healthcare more effective, affordable and accessible around the world. Our field service for products previously sold by our former Bio-discovery business, as well as our Informatics business, will be moved from our Environmental Health segment into our Human Health segment. We will report our financial results beginning in fiscal year 2013 using this new alignment under our Human Health and Environmental Health segments.
 

40


Human Health
2012 Compared to 2011 .  Revenue for fiscal year 2012 was $1,044.1 million , as compared to $884.4 million for fiscal year 2011 , an increase of $159.7 million , or 18% , which includes an approximate 14% increase in revenue attributable to acquisitions and an approximate 2% decrease in revenue attributable to changes in foreign exchange rates. The analysis in the remainder of this paragraph compares selected revenue by product type for fiscal year 2012 , as compared to fiscal year 2011 , and includes the effect of foreign exchange fluctuations and acquisitions. The increase in revenue in our Human Health segment was primarily a result of an increase in research market revenue of $110.9 million and an increase in diagnostics market revenue of $48.8 million . As a result of adjustments to deferred revenue related to certain acquisitions required by business combination rules, we did not recognize $6.1 million of revenue in our Human Health segment for fiscal year 2012 and $3.3 million of revenue in our Human Health segment for fiscal year 2011 that otherwise would have been recorded by the acquired businesses during each of the respective periods. This increase in our Human Health segment revenue during fiscal year 2012 was due primarily to growth in the research market due to continued demand for our in-vivo imaging systems with the addition of Caliper imaging systems, as well as increased demand for our JANUS ® automation tools and our Operetta ® cellular imaging systems. The growth in the research market was partially offset by a decline in demand for our suite of radioactive reagents, and reduced sales to pharmaceutical companies resulting from reduced research and development spending. We also experienced growth in the diagnostics market as birth rates in the United States began to stabilize and from continued expansion of our prenatal, newborn and infectious disease screening solutions in key regions outside the United States, particularly in emerging markets such as China. In our medical imaging business, we had growth in our traditional diagnostic imaging offerings and continued growth from our therapeutic and non-medical applications, as well as increased demand for our CMOS imaging technology.
 
Operating income from continuing operations for fiscal year 2012 was $73.7 million , as compared to $99.3 million for fiscal year 2011 , a decrease of $25.6 million , or 26% . Amortization of intangible assets increase d and was $67.9 million and $53.9 million for fiscal year 2012 and fiscal year 2011 , respectively. Restructuring and contract termination charges increase d and were $17.6 million for fiscal year 2012 as compared to $6.2 million for fiscal year 2011 . Impairment of assets was a charge of $54.3 million for fiscal year 2012 as a result of a review of certain of our trade names within our portfolio as part of a realignment of our marketing strategy, as compared to $3.0 million for fiscal year 2011 for the full impairment of license agreements, that we no longer intend to use. Acquisition related costs for integration, contingent consideration and other acquisition costs related to certain acquisitions added an expense of $0.2 million for fiscal year 2012 , as compared to an expense of $12.5 million for fiscal year 2011 . The amortization of purchase accounting adjustments to record the inventory from certain acquisitions was $5.2 million for fiscal year 2012 , as compared to $4.1 million for fiscal year 2011 . In addition, costs related to acquisitions and growth and productivity investments, particularly in emerging territories, decrease d operating income for fiscal year 2012 , which was partially offset by increased sales volume, favorable changes in product mix and cost containment initiatives.
 
2011 Compared to 2010 .  Revenue for fiscal year 2011 was $884.4 million , as compared to $793.7 million for fiscal year 2010 , an increase of $90.7 million , or 11% , which includes an approximate 6% increase in revenue attributable to acquisitions and an approximate 3% increase in revenue attributable to changes in foreign exchange rates. The analysis in the remainder of this paragraph compares selected revenue by product type for fiscal year 2011 , as compared to fiscal year 2010 , and includes the effect of foreign exchange fluctuations and acquisitions. The increase in revenue in our Human Health segment was primarily a result of an increase in diagnostics market revenue of $52.3 million and an increase in research market revenue of $38.4 million . As a result of adjustments to deferred revenue related to certain acquisitions required by business combination rules, we did not recognize $3.3 million of revenue in our Human Health segment for fiscal year 2011 and $0.7 million for fiscal year 2010 that otherwise would have been recorded by the acquired businesses during each of the respective periods. This increase in our Human Health segment revenue during fiscal year 2011 was due primarily to increased demand from the adoption of our neonatal and infectious disease screening offerings in the diagnostics market, increased growth for pre-clinical instruments and reagents in the research market, and continued growth from non-medical applications of our imaging technology in our medical imaging business. These increases were partially offset by the impact of lower birth rates in the United States and tight inventory management in state and national labs for neonatal screening in the diagnostics market, as well as reduced revenue to pharmaceutical companies resulting from continued customer consolidations in the pharmaceutical market and reduced demand for our legacy radioisotope portfolio in the research market.
  
Operating income from continuing operations for fiscal year 2011 was $99.3 million , as compared to $97.9 million for fiscal year 2010 , an increase of $1.5 million , or 1% . Amortization of intangible assets increase d and was $53.9 million and $46.7 million for fiscal year 2011 and fiscal year 2010 , respectively. Restructuring and contract termination charges decrease d and were $6.2 million for fiscal year 2011 as compared to $10.4 million for fiscal year 2010 . Impairment of assets was a charge of $3.0 million for fiscal year 2011 for the full impairment of license agreements, that we no longer intend to use. The gain on the sale of a facility in Boston, Massachusetts that was damaged in a fire in March 2005 was $3.4 million for fiscal year 2010. Acquisition related costs for integration, contingent consideration and other acquisition costs related to certain acquisitions

41


added an expense of $12.5 million for fiscal year 2011 , as compared to an expense of $1.3 million for fiscal year 2010 . The amortization of purchase accounting adjustments to record the inventory from certain acquisitions was $4.1 million for fiscal year 2011 . In addition to the above, increased sales volume and cost containment and productivity initiatives increased operating income for fiscal year 2011 , which was partially offset by changes in product mix with growth in sales of lower gross margin product offerings, increased sales and marketing expenses, particularly in emerging territories, and costs related to acquisitions and growth investments in research and development.
 
Environmental Health
2012 Compared to 2011 .  Revenue for fiscal year 2012 was $1,071.1 million , as compared to $1,034.1 million for fiscal year 2011 , an increase of $37.0 million , or 4% , which includes an approximate 2% decrease in revenue attributable to changes in foreign exchange rates and an approximate 1% increase in revenue attributable to acquisitions. The analysis in the remainder of this paragraph compares selected revenue by product type for fiscal year 2012 , as compared to fiscal year 2011 , and includes the effect of foreign exchange fluctuations and acquisitions. The increase in revenue in our Environmental Health segment was primarily a result of an increase in laboratory services market revenue of $47.2 million , partially offset by decrease s in environmental and industrial markets revenue of $10.2 million . As a result of adjustments to deferred revenue related to certain acquisitions required by business combination rules, we did not recognize $20.2 million of revenue primarily related to our informatics business in our Environmental Health segment for fiscal year 2012 and $27.5 million for fiscal year 2011 that otherwise would have been recorded by the acquired businesses during each of the respective periods. This increase in our Environmental Health segment revenue during the fiscal year 2012 was due primarily to growth in our informatics offerings within the laboratory services market, as well as continued strength in our inorganic analysis solutions. These increases were partially offset by decreased demand for our applications in the industrial markets.
 
Operating income from continuing operations for fiscal year 2012 was $97.3 million , as compared to $99.3 million for fiscal year 2011 , a decrease of $2.0 million , or 2% . Amortization of intangible assets decrease d and was $23.3 million and $26.1 million for fiscal year 2012 and fiscal year 2011 , respectively. Restructuring and contract termination charges increase d and were $7.6 million for fiscal year 2012 as compared to $7.3 million for fiscal year 2011 . Impairment of assets was a charge of $19.9 million for fiscal year 2012 as a result of a review of certain of our trade names within our portfolio as part of a realignment of our marketing strategy. Acquisition related costs for contingent consideration and other acquisition costs related to certain acquisitions was an expense of $0.1 million for fiscal year 2012 , as compared to income of $1.3 million for fiscal year 2011 . In addition, incremental costs primarily related to our informatics acquisitions and increased costs related to growth and productivity investments, particularly in emerging territories, decrease d operating income for fiscal year 2012 , which was partially offset by increased sales volume, changes in product mix with growth in sales of higher gross margin product offerings and cost containment initiatives.
 
2011 Compared to 2010 .  Revenue for fiscal year 2011 was $1,034.1 million , as compared to $908.0 million for fiscal year 2010 , an increase of $126.1 million , or 14% , which includes an approximate 3% increase in revenue attributable to changes in foreign exchange rates and an approximate 2% increase in revenue attributable to acquisitions. The analysis in the remainder of this paragraph compares selected revenue by product type for fiscal year 2011 , as compared to fiscal year 2010 , and includes the effect of foreign exchange fluctuations and acquisitions. The increase in revenue in our Environmental Health segment was primarily a result of increase s in environmental and industrial markets revenue of $75.9 million , and an increase in laboratory services market revenue of $50.1 million . As a result of adjustments to deferred revenue related to certain acquisitions required by business combination rules, we did not recognize $27.5 million of revenue primarily related to our informatics business in our Environmental Health segment for fiscal year 2011 that otherwise would have been recorded by the acquired businesses during that period. This increase in our Environmental Health segment revenue during the fiscal year 2011 was due primarily to growth in our environmental, food and consumer safety and testing products, as well as growth in our OneSource ® multivendor service offering as our comprehensive services continued to grow with our key customers. We also experienced continued growth in industrial markets with the reduction of constraints on capital purchases primarily related to materials analysis, chemical processing and semi-conductor applications supported by our molecular spectroscopy and chromatography platforms.
 
Operating income from continuing operations for fiscal year 2011 was $99.3 million , as compared to $95.1 million for fiscal year 2010 , an increase of $4.3 million , or 4% . Amortization of intangible assets increase d and was $26.1 million and $14.0 million for fiscal year 2011 and fiscal year 2010 , respectively. Restructuring and contract termination charges decrease d and were $7.3 million for fiscal year 2011 as compared to $8.5 million for fiscal year 2010 . Acquisition related costs for contingent consideration and other acquisition costs related to certain acquisitions added income of $1.3 million for fiscal year 2011 , as compared to an expense of $1.5 million for fiscal year 2010 . In addition to the above, increased sales volume and cost containment and productivity initiatives increase d operating income for fiscal year 2011 , which was partially offset by incremental costs primarily related to our informatics acquisitions, increased sales and marketing expenses, particularly in emerging territories, and increased freight costs.

42



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 and the capital markets, particularly the 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.
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.
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.
 
Cash Flows
Fiscal Year 2012
Operating Activities. Net cash provided by continuing operations was $153.6 million for fiscal year 2012 , as compared to net cash provided by continuing operations of $234.0 million for fiscal year 2011 , a decrease of $80.4 million . The cash provided by operating activities for fiscal year 2012 was principally a result of income from continuing operations of $68.4 million , and non-cash charges, including depreciation and amortization of $126.9 million , impairment of assets charge of $74.2 million , the expense related to our postretirement benefit plans, including the mark-to-market charge in the fourth quarter of fiscal year 2012 , of $35.3 million , restructuring and contract termination charges, net, of $25.1 million , and stock based compensation expense of $21.0 million . These amounts were partially offset by a net increase in working capital of $60.7 million . Contributing to the net increase in working capital for fiscal year 2012 , excluding the effect of foreign exchange rate fluctuations, was an increase in accounts receivable of $44.6 million , an increase in inventory of $8.2 million , and a decrease in accounts payable of $7.9 million . The increase in accounts receivable was a result of higher sales volume during the fourth quarter of fiscal year 2012 . The increase in inventory was primarily a result of realigning operations, research and development resources, and production resources within our Environmental Health and Human Health segments to ensure responsiveness to customer requirements as this realignment occurs. The decrease in accounts payable was primarily a result of the timing of disbursements during the fourth quarter of fiscal year 2012 . Changes in accrued expenses, other assets and liabilities and other items, net, decrease d cash provided by operating activities by $136.7 million for fiscal year 2012 , and primarily related to the timing of payments for tax, restructuring, and salary and benefits.
Investing Activities. Net cash used in the investing activities of our continuing operations was $82.8 million for fiscal year 2012 , as compared to net cash used in the investing activities of our continuing operations of $942.1 million for fiscal year 2011 , a decrease of $859.3 million . For fiscal year 2012 , we used $40.9 million of net cash for acquisitions and investments, as compared to $914.0 million used in fiscal year 2011 . Capital expenditures for fiscal year 2012 were $42.4 million , primarily for manufacturing equipment and other capital equipment purchases, which included $5.5 million of capital improvements to leased buildings, which have been funded by the lessor, as described below in our financing lease obligations. Restricted cash balances decreased for fiscal year 2012 by $0.5 million , as compared to a decrease in restricted cash balances of $1.3 million for fiscal year 2011 .
Financing Activities. Net cash used in the financing activities of our continuing operations was $44.2 million for fiscal year 2012 , as compared to net cash provided by the financing activities of our continuing operations of $399.1 million for fiscal

43


year 2011 , a decrease of $443.3 million . For fiscal year 2012 , we repurchased 82,186 shares of our common stock to satisfy minimum statutory tax withholding obligations in connection with the vesting of restricted stock awards, for a total cost of $2.1 million , including commissions. This compares to repurchases of 4.0 million shares of our common stock, including 84,243 shares of our common stock to satisfy minimum statutory tax withholding obligations in connection with the vesting of restricted stock awards, for a total cost of $110.0 million , including commissions, for fiscal year 2011 . This use of cash in fiscal year 2012 was offset by proceeds from common stock option exercises of $34.2 million , including $1.8 million for the related excess tax benefit. This compares to the proceeds from common stock option exercises of $33.1 million , including $9.3 million for the related excess tax benefit, for fiscal year 2011 . During fiscal year 2012 , debt borrowings from our senior unsecured revolving credit facility totaled $395.0 million , which was offset by debt reductions of $435.9 million . This compares to debt borrowings from our senior unsecured revolving credit facility of $787.0 million and net proceeds of $496.9 million from the issuance of our ten-year senior unsecured notes at a rate of 5% , which was partially offset by debt reductions of $763.0 million . We paid $31.9 million and $31.8 million in dividends during fiscal years 2012 and 2011 , respectively. In fiscal year 2012 , we received $4.1 million for settlement of forward foreign exchange contracts. In addition, we paid $0.4 million for debt issuance costs and we settled $12.5 million in contingent consideration recorded at the acquisition date fair value during fiscal year 2012 , as compared to $10.5 million for debt issuance costs and $0.1 million in contingent consideration recorded at the acquisition date fair value during fiscal year 2011 . We also recorded $5.5 million of financing related to capital improvements to leased buildings, which have been funded by the lessor, as described below in our financing lease obligations.

Fiscal Year 2011
Operating Activities. Net cash provided by continuing operations was $234.0 million for fiscal year 2011 , as compared to net cash provided by continuing operations of $167.2 million for fiscal year 2010 , an increase of $66.8 million . The cash provided by operating activities for fiscal year 2011 was principally a result of income from continuing operations of $1.2 million , and non-cash charges, including depreciation and amortization of $110.9 million , stock based compensation expense of $15.5 million , restructuring and contract termination charges, net, of $13.5 million , and the expense related to our postretirement benefit plans, including the mark-to-market charge in the fourth quarter of fiscal year 2011 , of $75.0 million . These amounts were partially offset by a net increase in working capital of $24.6 million . Contributing to the net increase in working capital for fiscal year 2011 , excluding the effect of foreign exchange rate fluctuations, was an increase in accounts receivable of $20.6 million , an increase in inventory of $2.2 million , and a decrease in accounts payable of $1.8 million . The increase in accounts receivable was a result of higher sales volume during the fourth quarter of fiscal year 2011 . The increase in inventory overall was primarily a result of expanding the amount of inventory held at sales locations within our Environmental Health and Human Health segments to improve responsiveness to customer requirements and for the introduction of new products. The decrease in accounts payable was primarily a result of the timing of disbursements during the fourth quarter of fiscal year 2011 . Changes in accrued expenses, other assets and liabilities and other items, net, increase d cash provided by operating activities by $42.6 million for fiscal year 2011 , and primarily related to the timing of payments for tax, restructuring, and salary and benefits.
Investing Activities. Net cash used in the investing activities of our continuing operations was $942.1 million for fiscal year 2011 , as compared to net cash used in the investing activities of our continuing operations of $174.1 million for fiscal year 2010 , an increase of $768.0 million . For fiscal year 2011 , we used $914.0 million of net cash for acquisitions, core technology purchases, acquired licenses and other costs in connection with these and other transactions. Capital expenditures for fiscal year 2011 were $30.6 million , primarily for capital equipment purchases. These cash outflows were partially offset by $0.5 million received during the third quarter of fiscal year 2011 from the disposition of property, plant and equipment and $0.8 million from the settlement of life insurance policies. Restricted cash balances decreased for fiscal year 2011 by $1.3 million .
Financing Activities. Net cash provided by the financing activities of our continuing operations was $399.1 million for fiscal year 2011 , as compared to net cash used in the financing activities of our continuing operations of $215.5 million for fiscal year 2010 , an increase of $614.6 million . For fiscal year 2011 , we repurchased 4.0 million shares of our common stock, including 84,243 shares of our common stock to satisfy minimum statutory tax withholding obligations in connection with the vesting of restricted stock awards, for a total cost of $110.0 million , including commissions. This compares to repurchases of 3.0 million shares of our common stock, including 57,551 shares of our common stock to satisfy minimum statutory tax withholding obligations in connection with the vesting of restricted stock awards, for a total cost of $72.8 million , including commissions, for fiscal year 2010 . This use of cash in fiscal year 2011 was partially offset by proceeds from common stock option exercises of $33.1 million , including $9.3 million for the related excess tax benefit. This compares to the proceeds from common stock option exercises of $31.4 million , including $2.4 million for the related excess tax benefit, for fiscal year 2010 . During fiscal year 2011 , debt borrowings from our senior unsecured revolving credit facility totaled $787.0 million with additional net proceeds of $496.9 million from the issuance of our ten-year senior unsecured notes at a rate of 5% , which was partially offset by debt reductions of $763.0 million . This compares to debt borrowings from our senior unsecured revolving credit facility of $368.0 million which was offset by debt reductions of $508.8 million during fiscal year 2010 . We paid $31.8 million and $33.0 million in dividends during fiscal years 2011 and 2010 , respectively. We paid $10.5 million for debt issuance

44


costs during fiscal year 2011 . In addition, we settled $0.1 million in contingent consideration recorded at the acquisition date fair value for acquisitions completed subsequent to fiscal year 2008 during both fiscal years 2011 and 2010 .
 
Borrowing Arrangements
Senior Unsecured Revolving Credit Facility.  On December 16, 2011, we entered into an amended and restated senior unsecured revolving credit facility which provides for $700.0 million of revolving loans and has an initial maturity of December 16, 2016 . As of December 30, 2012 , undrawn letters of credit in the aggregate amount of $12.3 million were treated as issued and outstanding under the senior unsecured revolving credit facility. As of December 30, 2012 , we had $429.7 million available for additional borrowing under the facility. We use the senior unsecured revolving credit facility for general corporate purposes, which may include working capital, refinancing existing indebtedness, capital expenditures, share repurchases, acquisitions and strategic alliances. The interest rates under the senior unsecured revolving credit facility are based on the Eurocurrency rate at the time of borrowing plus a margin, or the base rate from time to time. 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 Bank of America, N.A. as its "prime rate," (ii) the Federal Funds rate plus 50 basis points or (iii) one-month Libor plus 1.00%. The Eurocurrency margin as of December 30, 2012 was 130 basis points. The weighted average Eurocurrency interest rate as of December 30, 2012 was 0.21% , resulting in a weighted average effective Eurocurrency rate, including the margin, of 1.51% , which is the interest applicable to borrowings outstanding under the Eurocurrency rate as of December 30, 2012 . We had $258.0 million and $298.0 million of borrowings in U.S. Dollars outstanding under the senior unsecured revolving credit facility as of December 30, 2012 and January 1, 2012 , respectively, with interest based primarily on the above described Eurocurrency rate. The credit agreement for the facility contains affirmative, negative and financial covenants and events of default customary for financings of this type and similar to those contained in the credit agreement for our previous facility. The financial covenants in our amended and restated 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 our credit rating is downgraded below investment grade. We were in compliance with all applicable covenants as of December 30, 2012 .
 
6% Senior Unsecured Notes due 2015.  On May 30, 2008, we issued $150.0 million aggregate principal amount of 2015 Notes in a private placement and received $150.0 million of proceeds from the issuance. The 2015 Notes mature in May 2015 and bear interest at an annual rate of 6% . Interest on the 2015 Notes is payable semi-annually on May 30th and November 30th each year. We may redeem some or all of the 2015 Notes at any time, at our option, at a make-whole redemption price plus accrued and unpaid interest. The indenture governing the 2015 Notes includes financial covenants of debt-to-capital ratios and a contingent multiple of total debt to earnings ratio, applicable only if our credit rating is downgraded below investment grade. We were in compliance with all applicable covenants as of December 30, 2012 .
 
5% Senior Unsecured Notes due 2021.  On October 25, 2011, we issued $500.0 million aggregate principal amount of 2021 Notes in a registered public offering and received approximately $496.9 million of 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 . 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), we may redeem the 2021 Notes in whole or in part, at our 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), we may redeem the 2021 Notes, at our 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 us to repurchase such holder's 2021 Notes for 101% of their principal amount, plus accrued and unpaid interest. We were in compliance with all applicable covenants as of December 30, 2012 .

Financing Lease Obligations.  In September 2012, we entered into agreements with the lessors of buildings that we are currently occupying and leasing to expand those buildings. We provided a portion of the funds needed for the construction of the additions to the buildings, which resulted in us being considered the owner of the buildings during the construction period. At the end of the construction period, we will not be reimbursed by the lessors for all of the construction costs. We are therefore deemed to have continuing involvement and the leases will qualify as financing leases under sale-leaseback accounting guidance, representing debt obligations for us and non-cash investing and financing activities. As a result, we capitalized $29.3 million in property and equipment, net, representing the fair value of the buildings with a corresponding increase to debt. In addition, we expect to capitalize additional construction costs, which are not expected to exceed $15.0 million , and will be partially funded by the lessors to complete the additions to the buildings. During fiscal year 2012 , we recorded $5.5 million of capital improvements to these buildings, which have been funded by the lessor. 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

45


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.
 
Dividends
Our Board declared a regular quarterly cash dividend of $0.07 per share in each quarter of fiscal years 2012 and 2011 , resulting in an annual dividend rate of $0.28 per share. On January 25, 2013 , we announced that our Board had declared a quarterly dividend of $0.07 per share that is payable in May 2013 . 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.
 
Contractual Obligations
The following table summarizes our contractual obligations at December 30, 2012 for continuing and discontinued operations:
 
 
Operating
Leases
 
Sr. Unsecured
Revolving
Credit Facility
Maturing  2016 (1)
 
6.0% Sr. Notes
Maturing
2015 (2)
 
5.0% Sr. Notes
Maturing
2021 (2)(3)
 
Financing Lease Obligations (2)
 
Other Debt Facilities (2)
 
Employee
Benefit
Payments
 
Unrecognized
Tax
Benefits (4)
 
Total
 
(In thousands)
2013
$
55,103

 
$
—

 
$
9,000

 
$
25,000

 
$
1,667

 
$
105

 
$
28,187

 
$
4,762

 
$
123,824

2014
34,768

 
—

 
9,000

 
25,000

 
2,474

 
700

 
28,560

 
—

 
100,502

2015
25,692

 
—

 
153,750

 
25,000

 
2,482

 
—

 
29,539

 
—

 
236,463

2016
19,198

 
258,000

 
—

 
25,000

 
2,490

 
—

 
30,094

 
—

 
334,782

2017
15,793

 
—

 
—

 
25,000

 
2,498

 
—

 
30,494

 
—

 
73,785

Through 2023
58,864

 
—

 
—

 
596,918

 
22,997

 
—

 
163,026

 
—

 
841,805

Total
$
209,418

 
$
258,000

 
$
171,750

 
$
721,918

 
$
34,608

 
$
805

 
$
309,900

 
$
4,762

 
$
1,711,161

____________________________
(1)  
The credit facility borrowings carry variable interest rates; the amount included in this table does not include interest obligations.
(2)  
The 2015 Notes, the 2021 Notes, the Financing Lease Obligations, and Other Debt Facilities, include interest obligations.
(3)  
As of December 30, 2012 the 2021 Notes had a carrying value of $497.2 million .
(4)  
The amount includes accrued interest, net of tax benefits, and penalties. We have excluded $40.4 million , including accrued interest, net of tax benefits, and penalties, from the amount related to our uncertain tax positions as we cannot make a reasonably reliable estimate of the amount and period of related future payments.
 
*    Purchase commitments are minimal and have been excluded from this table.
 
Capital Expenditures
During fiscal year 2013 , we expect to invest an amount for capital expenditures similar to that in fiscal year 2012 , primarily to introduce new products, to improve our operating processes, to shift the production capacity to lower cost locations, and to develop information technology. We expect to use our available cash and internally generated funds to fund these expenditures. During fiscal year 2013 , we also expect to record activity related to capital improvements under our financing lease obligations, which are not expected to exceed $9.4 million , and will be partially funded by the lessors.
 
Other Potential Liquidity Considerations
At December 30, 2012 , we had cash and cash equivalents of $171.4 million and a senior unsecured revolving credit facility with $429.7 million available for additional borrowing under the facility.
 
Most of our cash is denominated in foreign currencies. 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. As a result of the Caliper acquisition, we concluded in fiscal year 2011 that certain foreign operations did not require the same level of capital as previously expected, and therefore we planned to repatriate approximately $350.0 million of previously unremitted earnings and have provided for the estimated taxes on the repatriation of those earnings. As a result of the planned repatriation, we recorded an increase to our tax provision of $79.7 million in continuing operations during the fourth quarter of fiscal year 2011. We expect to utilize tax attributes, primarily those acquired in the Caliper acquisition, to minimize the cash taxes paid on the repatriation. As of December 30, 2012 , we had remitted $229.2 million of the $350.0 million planned repatriation and we expect to remit the remainder of the planned repatriation amount by the end of fiscal year 2013. We expect accumulated non-U.S. cash balances

46


will remain outside of the U.S. and that we will meet U.S. liquidity needs through future cash flows, use of U.S. cash balances, external borrowings, or some combination of these sources.
 
On October 23, 2008, we announced that our Board authorized us to repurchase up to 10.0 million shares of common stock under a stock repurchase program (the “Repurchase Program”). On August 31, 2010, we announced that our Board had authorized us to repurchase an additional 5.0 million shares of common stock under the Repurchase Program. The Repurchase Program expired on October 22, 2012. On October 24, 2012, our Board authorized us to repurchase up to 6.0 million shares of common stock under a new stock repurchase program (the "New Repurchase Program"). The New Repurchase Program will expire on October 24, 2014 unless terminated earlier by our Board, and may be suspended or discontinued at any time. During fiscal year 2012 , we did not repurchase any shares of common stock under either of the stock repurchase programs. During fiscal year 2011 , we repurchased approximately 4.0 million shares of common stock in the open market at an aggregate cost of $107.8 million , including commissions, under the Repurchase Program. During fiscal year 2010 , we repurchased approximately 3.0 million shares of common stock in the open market at an aggregate cost of $71.5 million , including commissions, under the Repurchase Program. As of December 30, 2012 , approximately 6.0 million shares authorized by our Board under the New Repurchase Program remained available for repurchase. From December 31, 2012 through February 22, 2013 , we repurchased approximately 2.6 million shares of common stock in the open market at an aggregate cost of $89.0 million , including commissions, under the New Repurchase Program.
 
Our Board has authorized us 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 our equity incentive plans. During fiscal year 2012 , we repurchased 82,186 shares of common stock for this purpose at an aggregate cost of $2.1 million . During fiscal year 2011 , we repurchased 84,243 shares of common stock for this purpose at an aggregate cost of $2.2 million . During fiscal year 2010 , we repurchased 57,551 shares of common stock for this purpose at an aggregate cost of $1.3 million .

The repurchased shares have been reflected as a reduction in shares outstanding, but remain available to be reissued with the payments reflected in common stock and capital in excess of par value. Any repurchased shares will be available for use in connection with corporate programs. If we continue to repurchase shares, the Repurchase Program will be funded using our existing financial resources, including cash and cash equivalents, and our existing senior unsecured revolving credit facility.
 
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 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.
 
Our pension plans have not experienced a material impact on liquidity or counterparty exposure due to the volatility in the credit markets. During the first quarter of fiscal year 2013 , we made a contribution of $37.0 million for the 2012 plan year to our defined benefit pension plan in the United States. With respect to plans outside of the United States, we expect to contribute approximately $22.0 million in the aggregate during fiscal year 2013 , of which we contributed $10.0 million to one of our foreign plans during the first quarter of fiscal year 2013 . We could potentially have to make additional funding payments in future periods for all pension plans. During fiscal year 2012 , we made a contribution of $17.0 million for the 2011 plan year to our defined benefit pension plan in the United States, and $10.9 million in the aggregate to our defined benefit pension plans outside of the United States. During fiscal year 2011 , we made contributions of $11.5 million in the aggregate to our defined benefit pension plans outside of the United States. We expect to use existing cash and external sources to satisfy future contributions to our pension plans.
 
During the third quarter of fiscal year 2012 , we entered into a strategic agreement under which we acquired certain intangible assets and received a license to certain core technology for an analytics and data discovery platform, as well as the exclusive right to distribute the platform in certain scientific research and development markets. During fiscal year 2012 , we paid $6.8 million for net intangible assets and $25.0 million for prepaid royalties, and expect to pay an additional $13.2 million in prepaid royalties within the next year. Royalties are expected to be expensed as revenue is recognized.
 
Effects of Recently Adopted Accounting Pronouncements
During the first quarter of fiscal year 2012 we adopted new guidance for certain of our health care businesses that recognize patient service revenue at the time the services are rendered where we do not assess the patient's ability to pay at such

47


time. The new guidance requires us to present the provision for bad debts related to such revenue as a deduction from revenue (net of contractual allowances and discounts) on the statements of operations. The effects of the adoption on our consolidated statements of operations were decreases to revenue with corresponding decreases to selling, general and administrative expenses of $2.8 million for fiscal year 2012 , $2.8 million for fiscal year 2011 and $2.6 million for fiscal year 2010 . Accordingly, the financial data for all periods presented has been retrospectively adjusted to reflect the effect of these accounting changes.
 
Effects of Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”) and are adopted by us as of the specified effective dates. We believe that the impact of recently issued pronouncements will not have a material impact on our consolidated financial position, results of operations, and cash flows or do not apply to our operations.
 
Application of Critical Accounting Policies and Estimates
The preparation of 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.
 
We believe the following critical accounting policies affect our more significant judgments and estimates used in preparation of our consolidated financial statements.
 
Revenue recognition.  We record product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the price to the buyer is fixed or determinable, and collectability is reasonably assured. For products that include installation, and if the installation meets the criteria to be considered a separate element, we recognize product revenue upon delivery, and recognition of installation revenue is recognized when the installation is complete. For revenue that includes customer-specified acceptance criteria, we recognize revenue after the acceptance criteria have been met. Certain of our products require specialized installation. Revenue for these products is deferred until installation is completed. We defer revenue from services and recognize it over the contractual period, or as services are rendered.
 
In limited circumstances, we have arrangements that include multiple elements that are delivered at different points of time, such as revenue from products and services with a remaining service or storage component, such as cord blood processing and storage. For these arrangements, the revenue is allocated to each of the deliverables based upon their relative selling prices as determined by a selling-price hierarchy. A deliverable in an arrangement qualifies as a separate unit of accounting if the delivered item has value to the customer on a stand-alone basis. A delivered item that does not qualify as a separate unit of accounting is combined with the other undelivered items in the arrangement and revenue is recognized for those combined deliverables as a single unit of accounting. The selling price used for each deliverable is based upon vendor-specific objective evidence ("VSOE") if such evidence is available, third-party evidence ("TPE") if VSOE is not available, and management's best estimate of selling price ("BESP") if neither VSOE nor TPE are available. TPE is the price of our or any competitor's largely interchangeable products or services in stand-alone sales to similarly-situated customers. BESP is the price at which we would sell the deliverable if it were sold regularly on a stand-alone basis, considering market conditions and entity-specific factors.
 
Revenue from software licenses and services was 3% of our total revenue for fiscal year 2012 , 2% of our total revenue for fiscal year 2011 , and 1% of our total revenue for fiscal year 2010 . We sell our software licenses with maintenance services and, in some cases, also with consulting services. For the undelivered elements, we determine VSOE of fair value to be the price charged when the undelivered element is sold separately. We determine VSOE for maintenance sold in connection with a software license based on the amount that was separately charged for the maintenance renewal period. We determine VSOE for consulting services by reference to the amount charged for similar engagements when a software license sale is not involved.
 
We recognize revenue from software licenses sold together with maintenance and/or consulting services upon shipment using the residual method, provided that the above criteria have been met. If VSOE of fair value for the undelivered elements cannot be established, we defer all revenue from the arrangement until the earlier of the point at which such sufficient VSOE does exist or all elements of the arrangement have been delivered, or if the only undelivered element is maintenance, then we recognize the entire fee ratably over the maintenance period.
 

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The majority of our sales relate to specific manufactured products or units rather than long-term customized projects, therefore we generally do not experience significant changes in original estimates. Further, we have not experienced any significant refunds or promotional allowances that require significant estimation.
 
Warranty costs . We provide for estimated warranty costs for products at the time of their sale. Warranty liabilities are based on estimated future repair costs using historical labor and material costs incurred in the warranty period.
 
Allowances for doubtful accounts.  We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We generally compute our allowance for doubtful accounts by (i) applying specific percentage reserves on accounts that are past due and deemed uncollectible; and (ii) specifically reserving for customers known to be in financial difficulty. Therefore, if the financial condition of our customers were to deteriorate beyond our estimates, we may have to increase our allowance for doubtful accounts. This would reduce our earnings. Accounts are written-off only when all methods of recovery have been exhausted.
 
Inventory valuation.  We initially value inventory at actual cost to purchase and/or manufacture. We periodically review these values to ascertain that market value of the inventory continues to exceed its recorded cost. Generally, reductions in value of inventory below cost are caused by our maintenance of stocks of products in excess of demand, or technological obsolescence of the inventory. We regularly review inventory quantities on hand and, when necessary, record provisions for excess and obsolete inventory based on either our estimated forecast of product demand and production requirements, or historical trailing usage of the product. If our sales do not materialize as planned or at historic levels, we may have to increase our reserve for excess and obsolete inventory. This would reduce our earnings. If actual market conditions are more favorable than anticipated, inventory previously written down may be sold, resulting in lower costs of sales and higher income from operations than expected in that period.
 
Business combinations.  Business combinations are accounted for at fair value. Acquisition costs are expensed as incurred and recorded in selling, general and administrative expenses; previously held equity interests are valued at fair value upon the acquisition of a controlling interest; in-process research and development (“IPR&D”) is recorded at fair value as an intangible asset at the acquisition date; restructuring costs associated with a business combination are expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date affect income tax expense. All changes that do not qualify as measurement period adjustments are included in current period earnings. The accounting for business combinations requires estimates and judgment as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair value for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of finite-lived intangible assets, or the recognition of additional consideration which would be expensed.

Value of long-lived assets, including goodwill and other intangibles.  We carry a variety of long-lived assets on our consolidated balance sheets including property and equipment, investments, identifiable intangible assets, and goodwill. We periodically review the carrying value of all of these assets based, in part, upon current estimated market values and our projections of anticipated future cash flows. We undertake this review (i) on an annual basis for assets such as goodwill and non-amortizing intangible assets and (ii) on a periodic basis for other long-lived assets when facts and circumstances suggest that cash flows related to those assets may be diminished. Any impairment charge that we record reduces our earnings. The goodwill impairment 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. We perform the annual impairment assessment on the later of January 1 or the first day of each fiscal year. This same impairment test will be performed at other times during the course of the year should an event occur which suggests that the recoverability of goodwill should be reconsidered. Non-amortizing intangibles are also subject to an annual impairment test. The impairment test consists of a comparison of the fair value of the non-amortizing intangible asset with its carrying amount. If the carrying amount of a non-amortizing intangible asset exceeds its fair value, an impairment loss in an amount equal to that excess is recognized . In addition, we currently evaluate the remaining useful life of our 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 life and accounted for in the same manner as other intangible assets that are subject to amortization. As part of integrating our recent acquisitions, in the fourth quarter of fiscal year 2012, we decided that prospectively we would primarily focus on the PerkinElmer trade name. Accordingly, we

49


undertook a review of certain of our trade names within our portfolio as part of a realignment of our marketing strategy, which resulted in pre-tax impairment charges of $74.2 million in fiscal year 2012. We concluded that the impairment for trade names was not a triggering event for goodwill because the impairment occurred as a result of our decision to phase out certain trade names. We do not believe that our future cash flows will be significantly impacted by these changes. Through fiscal year 2012 , we assessed the annual impairment testing for our reporting units: analytical sciences and laboratory services, diagnostics, life sciences technology and medical imaging. We completed the annual impairment test using a measurement date of January 2, 2012 and January 3, 2011, and concluded based on the first step of the process that there was no goodwill impairment and the fair value substantially exceeded the carrying value. While we believe that our estimates of current value are reasonable, if actual results differ from the estimates and judgments used including such items as future cash flows and the volatility inherent in markets which we serve, impairment charges against the carrying value of those assets could be required in the future.
 
Employee compensation and benefits.  We sponsor both funded and unfunded U.S. and non-U.S. defined benefit pension plans and other postretirement benefits. Retirement and postretirement benefit plans are a significant cost of doing business, and represent obligations that will be ultimately settled far in the future, and therefore are subject to estimation. Retirement and postretirement benefit plan expenses are allocated to cost of revenue, research and development, and selling, general and administrative expenses, in our consolidated statements of operations. We immediately recognize actuarial gains and losses in operating results in the year in which the gains and losses occur. Actuarial gains and losses are measured annually as of fiscal year end and accordingly will be recorded in the fourth quarter, unless we are required to perform an interim remeasurement.
 
We incurred expenses of $35.3 million in fiscal year 2012 , $75.0 million in fiscal year 2011 and $3.8 million in fiscal year 2010 for our retirement and postretirement benefit plans, which includes the charge for the mark-to-market adjustment for the postretirement benefit plans, which generally is recorded in the fourth quarter. The expense related to mark-to-market on postretirement benefit plans was $31.8 million in fiscal year 2012 , $67.9 million in fiscal year 2011 and $0.2 million in fiscal year 2010 . We expect expenses of approximately $0.3 million in fiscal year 2013 for our retirement and postretirement benefit plans, excluding the charge for or benefit from the mark-to-market adjustment. It is difficult to reliably calculate and predict whether there will be a mark-to-market adjustment in fiscal year 2013 . Mark-to-market adjustments are primarily driven by events and circumstances beyond our control, including changes in interest rates and the performance of the financial markets. To the extent the discount rates decrease or the value of our pension and postretirement investments decrease, mark-to market charges to operations will be recorded in fiscal year 2013 . Conversely, to the extent the discount rates increase or the value of our pension and postretirement investments increase more than expected, mark-to market income will be recorded in fiscal year 2013 . Pension accounting is intended to reflect the recognition of future benefit costs over the employee’s approximate service period based on the terms of the plans and the investment and funding decisions made. We are required to make assumptions regarding such variables as the expected long-term rate of return on assets and the discount rate applied, to determine service cost and interest cost, in order to arrive at expected pension income or expense for the year.

  As of December 30, 2012 , we estimate the expected long-term rate of return on assets in our pension portfolios in the United States to be 7.50% and to be 5.50% for all plans outside the United States. In addition, as of December 30, 2012 we estimate the discount rate for our pension portfolios in the United States to be 3.90% and to be 3.62% for all plans outside the United States. We have analyzed the rates of return on assets used and determined that these rates are reasonable based on the plans’ historical performance relative to the overall markets in the countries where we invest the assets, as well as our current expectations for long-term rates of returns for our pension and other postretirement benefit assets. Our management will continue to assess the expected long-term rate of return on plan assets assumptions for each plan based on relevant market conditions, and will make adjustments to the assumptions as appropriate. Discount rate assumptions have been, and continue to be, based on the prevailing market long-term interest rates corresponding with expected benefit payments at the measurement date.


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If any of our assumptions were to change as of December 30, 2012 , our pension plan expenses would also change.
 
 
 
 
Increase (Decrease) at December 30, 2012
 
Percentage Point Change
 
Non-U.S.
 
U.S.
Pension plans discount rate
+0.25
 
(9,181
)
 
(8,757
)
 
-0.25
 
9,499

 
9,192

Rate of return on pension plan assets
+1.00
 
(1,145
)
 
(2,218
)
 
-1.00
 
1,145

 
2,218

Postretirement benefit plans discount rate
+0.25
 
N/A
 
(108
)
 
-0.25
 
N/A
 
114

Rate of return on postretirement benefit plan assets
+1.00
 
N/A
 
(130
)
 
-1.00
 
N/A
 
130

 
We have reduced the volatility in our healthcare costs provided to our retirees by adopting a defined dollar plan feature in fiscal year 2001. Under the defined dollar plan feature, our total annual liability for healthcare costs to any one retiree is limited to a fixed dollar amount, regardless of the nature or cost of the healthcare needs of that retiree. Our maximum future liability, therefore, cannot be increased by future changes in the cost of healthcare.
 
Restructuring activities.  Our consolidated financial statements detail specific charges relating to restructuring activities as well as the actual spending that has occurred against the resulting accruals. Our pre-tax restructuring charges are estimates based on our preliminary assessments of (i) severance benefits to be granted to employees, based on known benefit formulas and identified job grades, (ii) costs to abandon certain facilities based on known lease costs of sub-rental income and (iii) impairment of assets as discussed above under “Value of long-lived assets, including goodwill and other intangibles.” Because these accruals are estimates, they are subject to change as a result of deviations from initial restructuring plans or subsequent information that may come to our attention. For example, actual severance costs may be less than anticipated if employees voluntarily leave prior to the time at which they would be entitled to severance, or if anticipated legal hurdles in foreign jurisdictions prove to be less onerous than expected. In addition, unanticipated successes or difficulties in terminating leases and other contractual obligations may lead to changes in estimates. When such changes in estimates occur, they are reflected in our consolidated financial statements on our consolidated statements of operations line entitled “restructuring and contract termination charges, net.”
 
Dispositions.  When we record the disposition of an asset or discontinuance of an operation, we make an estimate relative to the amount we expect to realize on the sale or disposition. This estimate is based on a variety of factors, including current interest in the market, alternative markets for the assets, and other relevant factors. If anticipated proceeds are less than the current carrying amount of the asset or operation, we record a loss. If anticipated proceeds are greater than the current carrying amount of the asset or operation, we recognize a gain net of expected contingencies when the transaction has been consummated. Accordingly, we may realize amounts different than were first estimated. During the fiscal year ended December 30, 2012 , we recorded $2.4 million in pre-tax gains from the disposition of discontinued operations. Any such changes decrease or increase current earnings.
 
Income taxes.  Our business operations are global in nature, and we are subject to taxes in numerous jurisdictions. Tax laws and tax rates vary substantially in these jurisdictions, and are subject to change given the political and economic climate in those countries. We report and pay income tax based on operational results and applicable law. Our tax provision contemplates tax rates currently in effect to determine both our current and deferred tax provisions. Any significant fluctuation in rates or changes in tax laws could cause our estimates of taxes we anticipate either paying or recovering in the future to change. Such changes could lead to either increases or decreases in our effective tax rate.
 
On January 2, 2013, the American Taxpayer Relief Act of 2012 was enacted which retroactively reinstated and extended the Federal Research and Development Tax Credit ("Federal R&D Tax Credit") from January 1, 2012 to December 31, 2013. As a result, we expect our income tax provision for the first quarter of fiscal year 2013 will include an approximate $1.3 million discrete tax benefit relating to the previously unrecognized Federal R&D Tax Credits from January 1, 2012 to December 31, 2012.

Significant judgment is required in determining our worldwide provision for income taxes and recording the related tax assets and liabilities. In the ordinary course of our business, there are operational decisions, transactions, facts and circumstances, and calculations for which the ultimate tax determination is not certain. Furthermore, our tax positions are

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periodically subject to challenge by taxing authorities throughout the world. Every quarter we review our tax positions in each significant taxing jurisdiction in the process of evaluating our unrecognized tax benefits. Adjustments are made to our unrecognized tax benefits when: (i) facts and circumstances regarding a tax position change, causing a change in our 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. Any significant impact as a result of changes in underlying facts, law, tax rates, tax audit, or review could lead to adjustments to our income tax expense, our effective tax rate, or our cash flow.
 
Additionally, we have established valuation allowances against a variety of deferred tax assets, including state net operating loss carryforwards, state income tax credit carryforwards, and certain foreign tax attributes. Valuation allowances take into consideration our ability to use these deferred tax assets and reduce the value of such items to the amount that is deemed more likely than not to be recoverable. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, we begin with historical results adjusted for the results of discontinued operations and incorporate assumptions about the future pretax operating income adjusted for items that do not have tax consequences. These assumptions about future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying business. Changes in our assumptions regarding the appropriate amount for valuation allowances could result in the increase or decrease in the valuation allowance, with a corresponding charge or benefit to our tax provision.
 
Taxes have not been provided for unremitted earnings that we continue to consider indefinitely reinvested, the determination of which is based on our future operational and capital requirements. We continue to maintain our indefinite reinvestment assertion with regards to the remaining unremitted earnings of our foreign subsidiaries, and therefore do not accrue U.S. tax for the repatriation of the remaining unremitted foreign earnings. As of December 30, 2012 , the amount of foreign earnings that we have the intent and ability to keep invested outside the U.S. indefinitely and for which no U.S. tax cost has been provided was approximately $472.0 million . It is not practical to calculate the unrecognized deferred tax liability on those earnings.

Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
 
Quantitative and Qualitative Disclosures about Market Risk
Financial Instruments
Financial instruments that potentially subject us to concentrations of credit risk consist principally of temporary cash investments, marketable securities and accounts receivable. We believe we had no significant concentrations of credit risk as of December 30, 2012 .
 
We use derivative instruments as part of our risk management strategy only, and include derivatives utilized as economic hedges that are not designated as hedging instruments. By nature, all financial instruments involve market and credit risks. We enter into derivative instruments with major investment grade financial institutions and have policies to monitor the credit risk of those counterparties. We do not enter into derivative contracts for trading or other speculative purposes, nor do we use leveraged financial instruments. Approximately 60% of our business is conducted outside of the United States, generally in foreign currencies. Therefore, the fluctuations in foreign currency can increase the costs of financing, investing and operating the business.
 
In the ordinary course of business, we may enter into foreign exchange contracts for periods consistent with our 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 denominated 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 consolidated balance sheets. Unrealized gains and losses on our foreign currency contracts are recognized immediately in earnings for hedges designated as fair value and, for hedges designated as cash flow, the related unrealized gains or losses are deferred as a component of other comprehensive (loss) income in the accompanying consolidated balance sheets. Deferred gains and losses are recognized in income in the period in which the underlying anticipated transaction occurs and impacts earnings.
 
Principal hedged currencies include the British Pound, Canadian Dollar, Euro, Japanese Yen, and Singapore Dollar. We held forward foreign exchange contracts, designated as fair value hedges, with U.S. equivalent notional amounts totaling $64.3 million at December 30, 2012 and $268.9 million at January 1, 2012 , and the approximate fair value of these foreign currency derivative contracts was insignificant. The duration of these contracts was generally 30 days or less during fiscal years 2012, 2011, and 2010 .
 

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As of December 30, 2012 , we had two cash flow hedges outstanding, and as of January 1, 2012 , we had no outstanding cash flow hedges. During the fourth quarter of fiscal year 2012 , we entered into two forward foreign exchange contracts with settlement dates in fiscal year 2013 and combined Euro denominated notional amounts of Euro 50.0 million , designated as cash flow hedges. The fair value of these currency derivative contracts at December 30, 2012 was $0.1 million . In May 2008 , we settled forward interest rate contracts with notional amounts totaling $150.0 million upon the issuance of our 2015 Notes, and recognized $8.4 million , net of taxes of $5.4 million , of accumulated derivative losses in other comprehensive income. The derivative losses are being amortized into interest expense when the hedged exposure affects interest expense. As of December 30, 2012 , the balance remaining in accumulated other comprehensive income related to the effective cash flow hedges was $2.9 million , net of taxes of $1.9 million . We amortized $2.0 million into interest expense during each of the fiscal years 2012, 2011, and 2010 .
 
Market Risk
Market Risk.  We are exposed to market risk, including changes in interest rates and currency exchange rates. To manage the volatility relating to these exposures, we enter into various derivative transactions pursuant to our policies to hedge against known or forecasted market exposures.
 
Foreign Exchange Risk.  The potential change in foreign currency exchange rates offers a substantial risk to us, as approximately 60% of our business is conducted outside of the United States, generally in foreign currencies. Our risk management strategy currently uses forward contracts to mitigate certain balance sheet foreign currency transaction exposures. The intent of these economic hedges is to offset gains and losses that occur on the underlying exposures, with gains and losses resulting from the forward contracts that hedge these exposures. Moreover, we are able to partially mitigate the impact that fluctuations in currencies have on our net income as a result of our manufacturing facilities located in countries outside the United States, material sourcing and other spending which occur in countries outside the United States, resulting in natural hedges.
 
Although we attempt to manage our foreign currency exchange risk through the above activities, when the U.S. dollar weakens against other currencies in which we transact business, generally sales and net income will be positively but not proportionately impacted.
 
Foreign Currency Risk—Value-at-Risk Disclosure . We utilize a Value-at-Risk model to determine the potential earning/fair value exposures presented by our foreign currency related financial instruments. As discussed above, we seek to minimize this exposure through our hedging program. Our Value-at-Risk computation is based on the Monte Carlo simulation, utilizing a 95% confidence interval and a holding period of 30 days. As of December 30, 2012 , this computation estimated that there is a 5% chance that the market value of the underlying exposures and the corresponding derivative instruments either increase or decrease due to foreign currency fluctuations by more than $0.3 million . This Value-At-Risk measure is consistent with our financial statement disclosures relative to our foreign currency hedging program. Specifically, during each of the four quarters ended in fiscal year 2012 , the Value-At-Risk ranged between $0.2 million and $0.5 million , with an average of approximately $0.3 million .
 
Interest Rate Risk.  As described above, our debt portfolio includes variable rate instruments. Fluctuations in interest rates can therefore have a direct impact on both our short-term cash flows, as they relate to interest, and our earnings. To manage the volatility relating to these exposures, we periodically enter into various derivative transactions pursuant to our policies to hedge against known or forecasted interest rate exposures.
 
In May 2008 , we settled forward interest rate contracts with notional amounts totaling $150.0 million upon the issuance of our 2015 Notes, and recognized $8.4 million , net of taxes of $5.4 million , of accumulated derivative losses in other comprehensive income. The derivative losses are being amortized into interest expense when the hedged exposure affects interest expense. As of December 30, 2012 , the balance remaining in accumulated other comprehensive income related to the effective cash flow hedges was $2.9 million , net of taxes of $1.9 million . We amortized $2.0 million into interest expense during each of the fiscal years 2012, 2011, and 2010 .

Interest Rate Risk—Sensitivity . As of December 30, 2012 , our debt portfolio consisted of $258.0 million of variable rate debt. In addition, our cash and cash equivalents, for which we receive interest at variable rates, were $171.4 million at December 30, 2012 . Our current earnings exposure for changes in interest rates can be summarized as follows:
 
(i) Changes in interest rates can cause interest charges on our variable rate debt, consisting of $258.0 million of revolving debt facilities, to fluctuate. An increase of 10% , or approximately 15 basis points, in current interest rates would cause an additional pre-tax charge to our earnings of $0.4 million for fiscal year 2013 .
 

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(ii) Changes in interest rates can cause our cash flows relative to interest payments on variable rate debt to fluctuate. As described above, an increase of 10% , or approximately 15 basis points, in current interest rates would cause our cash outflows to increase by $0.4 million for fiscal year 2013 .
 
(iii) Changes in interest rates can cause our interest income and cash flows to fluctuate.


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Item 8.
Financial Statements and Supplemental Data
 
TABLE OF CONTENTS
 


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Stockholders of PerkinElmer, Inc.
Waltham, Massachusetts
 
We have audited the accompanying consolidated balance sheets of PerkinElmer, Inc. and subsidiaries (the “Company”) as of December 30, 2012 and January 1, 2012 , and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 30, 2012 . Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of PerkinElmer, Inc. and subsidiaries as of December 30, 2012 and January 1, 2012 , and the results of their operations and their cash flows for each of the three years in the period ended December 30, 2012 , in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 30, 2012 , based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2013 expressed an unqualified opinion on the Company’s internal control over financial reporting.
 
/s / D ELOITTE  & T OUCHE LLP
 
Boston, Massachusetts
February 26, 2013

56


CONSOLIDATED STATEMENTS OF OPERATIONS
 
For the Fiscal Years Ended
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
 
 
(As adjusted)
 
(In thousands, except per share data)
Revenue
 
 
 
 
 
Product revenue
$
1,474,674

 
$
1,319,510

 
$
1,161,742

Service revenue
640,531

 
598,998

 
540,025

Total revenue
2,115,205

 
1,918,508

 
1,701,767

Cost of product revenue
762,989

 
686,812

 
609,217

Cost of service revenue
389,010

 
383,896

 
333,895

Selling, general and administrative expenses
632,734

 
624,393

 
487,313

Research and development expenses
132,639

 
115,821

 
94,811

Restructuring and contract termination charges, net
25,137

 
13,452

 
18,963

Impairment of assets
74,153

 
3,006

 
—

Operating income from continuing operations
98,543

 
91,128

 
157,568

Interest and other expense (income), net
47,956

 
26,774

 
(8,383
)
Income from continuing operations before income taxes
50,587

 
64,354

 
165,951

(Benefit from) provision for income taxes
(17,854
)
 
63,182

 
27,043

Income from continuing operations
68,441

 
1,172

 
138,908

Income from discontinued operations before income taxes
—

 
—

 
30,772

Gain on disposition of discontinued operations before income taxes
2,405

 
1,999

 
317,896

Provision for (benefit from) income taxes on discontinued operations and dispositions
906

 
(4,484
)
 
96,593

Income from discontinued operations and dispositions
1,499

 
6,483

 
252,075

Net income
$
69,940

 
$
7,655

 
$
390,983

Basic earnings per share:
 
 
 
 
 
Continuing operations
$
0.60

 
$
0.01

 
$
1.19

Discontinued operations
0.01

 
0.06

 
2.15

Net income
$
0.61

 
$
0.07

 
$
3.34

Diluted earnings per share:
 
 
 
 
 
Continuing operations
$
0.60

 
$
0.01

 
$
1.18

Discontinued operations
0.01

 
0.06

 
2.14

Net income
$
0.61

 
$
0.07

 
$
3.31

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

57
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
For the Fiscal Years Ended
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Net income
$
69,940

 
$
7,655

 
$
390,983

Other comprehensive income (loss)
 
 
 
 
 
Foreign currency translation adjustments, net of tax
11,363

 
1,814

 
(34,086
)
Reclassification of foreign currency translation gains to earnings upon sale of subsidiaries
—

 
—

 
394

Unrecognized prior service costs, net of tax
(82
)
 
107

 
(1,013
)
Reclassification adjustments for losses on derivatives included in net income, net of tax
1,196

 
1,196

 
1,196

Unrealized gains (losses) on securities, net of tax
30

 
(59
)
 
64

Other comprehensive income (loss)
12,507

 
3,058

 
(33,445
)
Comprehensive income
$
82,447

 
$
10,713

 
$
357,538

 











































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



58
Table of Contents


CONSOLIDATED BALANCE SHEETS
 
As of the Fiscal Years Ended
 
 
December 30,
2012
 
January 1,
2012
 
 
 
(As adjusted)
 
(In thousands, except share
and per share data)
Current assets:
 
 
 
Cash and cash equivalents
$
171,444

 
$
142,342

Accounts receivable, net
457,011

 
409,888

Inventories, net
247,688

 
240,763

Other current assets
95,611

 
89,857

Current assets of discontinued operations
—

 
202

Total current assets
971,754

 
883,052

Property, plant and equipment, net
210,516

 
174,567

Marketable securities and investments
1,149

 
1,105

Intangible assets, net
529,901

 
661,607

Goodwill
2,122,788

 
2,094,235

Other assets, net
65,654

 
41,075

Total assets
$
3,901,762

 
$
3,855,641

Current liabilities:
 
 
 
Short-term debt
$
1,772

 
$
—

Accounts payable
168,943

 
173,153

Accrued restructuring
21,364

 
13,958

Accrued expenses and other current liabilities
388,026

 
410,142

Current liabilities of discontinued operations
995

 
1,429

Total current liabilities
581,100

 
598,682

Long-term debt
938,824

 
944,908

Long-term liabilities
442,026

 
469,835

Total liabilities
1,961,950

 
2,013,425

Commitments and contingencies (see Note 16)


 


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 115,036,000 and 113,157,000 shares at December 30, 2012 and January 1, 2012, respectively
115,036

 
113,157

Capital in excess of par value
209,610

 
164,290

Retained earnings
1,548,573

 
1,510,683

Accumulated other comprehensive income
66,593

 
54,086

Total stockholders’ equity
1,939,812

 
1,842,216

Total liabilities and stockholders’ equity
$
3,901,762

 
$
3,855,641

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

59
Table of Contents


CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
 
For the Three Fiscal Years Ended December 30, 2012
 
 
Common
Stock
Amount
 
Capital in
Excess of
Par Value
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Stockholders’
Equity
 
(In thousands)
Balance, January 3, 2010
$
117,023

 
$
250,599

 
$
1,176,576

 
$
84,473

 
$
1,628,671

Net income
—

 
—

 
390,983

 
—

 
390,983

Other comprehensive loss
—

 
—

 
—

 
(33,445
)
 
(33,445
)
Dividends
—

 
—

 
(32,924
)
 
—

 
(32,924
)
Exercise of employee stock options and related income tax benefits
1,543

 
29,714

 
—

 
—

 
31,257

Issuance of common stock for employee benefit plans
86

 
1,780

 
—

 
—

 
1,866

Purchases of common stock
(3,058
)
 
(69,710
)
 
—

 
—

 
(72,768
)
Issuance of common stock for long-term incentive program
121

 
5,126

 
—

 
—

 
5,247

Stock compensation
—

 
6,504

 
—

 
—

 
6,504

Balance, January 2, 2011
$
115,715

 
$
224,013

 
$
1,534,635

 
$
51,028

 
$
1,925,391

Net income
—

 
—

 
7,655

 
—

 
7,655

Other comprehensive income
—

 
—

 
—

 
3,058

 
3,058

Dividends
—

 
—

 
(31,607
)
 
—

 
(31,607
)
Exercise of employee stock options and related income tax benefits
1,138

 
31,196

 
—

 
—

 
32,334

Issuance of common stock for employee benefit plans
103

 
2,094

 
—

 
—

 
2,197

Purchases of common stock
(4,084
)
 
(105,921
)
 
—

 
—

 
(110,005
)
Issuance of common stock for long-term incentive program
285

 
8,372

 
—

 
—

 
8,657

Stock compensation
—

 
4,536

 
—

 
—

 
4,536

Balance, January 1, 2012
$
113,157

 
$
164,290

 
$
1,510,683

 
$
54,086

 
$
1,842,216

Net income
—

 
—

 
69,940

 
—

 
69,940

Other comprehensive income
—

 
—

 
—

 
12,507

 
12,507

Dividends
—

 
—

 
(32,050
)
 
—

 
(32,050
)
Exercise of employee stock options and related income tax benefits
1,611

 
32,395

 
—

 
—

 
34,006

Issuance of common stock for employee benefit plans
54

 
1,269

 
—

 
—

 
1,323

Purchases of common stock
(82
)
 
(2,022
)
 
—

 
—

 
(2,104
)
Issuance of common stock for long-term incentive program
296

 
8,659

 
—

 
—

 
8,955

Stock compensation
—

 
5,019

 
—

 
—

 
5,019

Balance, December 30, 2012
$
115,036

 
$
209,610

 
$
1,548,573

 
$
66,593

 
$
1,939,812

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

60
Table of Contents


CONSOLIDATED STATEMENTS OF CASH FLOWS
 
For the Fiscal Years Ende d
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Operating activities:
 
 
 
 
 
Net income
$
69,940

 
$
7,655

 
$
390,983

Less: income from discontinued operations and dispositions
(1,499
)
 
(6,483
)
 
(252,075
)
Income from continuing operations
68,441

 
1,172

 
138,908

Adjustments to reconcile income from continuing operations to net cash provided by continuing operations:
 
 
 
 
 
Restructuring and contract termination charges, net
25,137

 
13,452

 
18,963

Depreciation and amortization
126,865

 
110,921

 
89,163

Stock-based compensation
21,031

 
15,482

 
12,416

Pension and other postretirement expense
35,336

 
74,974

 
3,832

Deferred taxes
(65,551
)
 
(289
)
 
(24,495
)
Contingencies and non-cash tax matters
1,382

 
5,482

 
(7,671
)
Amortization of deferred debt issuance costs, interest rate hedge and accretion of discounts
3,517

 
5,651

 
2,613

Losses (gains) on step acquisition and dispositions, net
—

 
113

 
(28,942
)
Amortization of acquired inventory revaluation
5,214

 
4,092

 
—

Impairment of assets
74,153

 
3,006

 
—

Changes in assets and liabilities which (used) provided cash, excluding effects from companies purchased and divested:
 
 
 
 
 
Accounts receivable, net
(44,626
)
 
(20,597
)
 
(38,103
)
Inventories, net
(8,213
)
 
(2,200
)
 
(22,535
)
Accounts payable
(7,876
)
 
(1,776
)
 
27,789

Excess tax benefit from exercise of common stock options
(1,767
)
 
(9,321
)
 
2,405

Accrued expenses and other
(79,468
)
 
33,841

 
(7,140
)
Net cash provided by operating activities of continuing operations
153,575

 
234,003

 
167,203

Net cash used in operating activities of discontinued operations
(1,405
)
 
(9,129
)
 
(2,950
)
Net cash provided by operating activities
152,170

 
224,874

 
164,253

Investing activities:
 
 
 
 
 
Capital expenditures
(42,408
)
 
(30,592
)
 
(33,646
)
Proceeds from dispositions of property, plant and equipment, net
—

 
456

 
11,014

Changes in restricted cash balances
487

 
1,250

 
(1,120
)
Proceeds from surrender of life insurance policies
—

 
814

 
—

Payments for acquisitions and investments, net of cash and cash equivalents acquired
(40,858
)
 
(914,041
)
 
(150,374
)
Net cash used in investing activities of continuing operations
(82,779
)
 
(942,113
)
 
(174,126
)
Net cash provided by investing activities of discontinued operations
2,470

 
32,252

 
469,275

Net cash (used in) provided by investing activities
(80,309
)
 
(909,861
)
 
295,149

Financing activities:
 
 
 
 
 
Payments on revolving credit facility
(435,850
)
 
(763,000
)
 
(508,846
)
Proceeds from revolving credit facility
395,000

 
787,000

 
368,000

Proceeds from sale of senior debt
—

 
496,860

 
—

Payments of debt issuance costs
(416
)
 
(10,531
)
 
(72
)
Proceeds from (payments on) other credit facilities
5,274

 
(2,303
)
 
(149
)
Settlement of cash flow hedges
4,050

 
—

 
—

Payments for acquisition related contingent consideration
(12,459
)
 
(137
)
 
(136
)
Excess tax benefit from exercise of common stock options
1,767

 
9,321

 
2,405

Proceeds from issuance of common stock under stock plans
32,478

 
23,736

 
29,035

Purchases of common stock
(2,104
)
 
(110,005
)
 
(72,768
)
Dividends paid
(31,903
)
 
(31,829
)
 
(32,992
)
Net cash (used in) provided by financing activities of continuing operations
(44,163
)
 
399,112

 
(215,523
)
Net cash used in financing activities of discontinued operations
—

 
(1,908
)
 
(2,844
)
Net cash (used in) provided by financing activities
(44,163
)
 
397,204

 
(218,367
)
Effect of exchange rate changes on cash and cash equivalents
1,404

 
10,039

 
(656
)
Net increase (decrease) in cash and cash equivalents
29,102

 
(277,744
)
 
240,379

Cash and cash equivalents at beginning of year
142,342

 
420,086

 
179,707

Cash and cash equivalents at end of year
$
171,444

 
$
142,342

 
$
420,086

Supplemental disclosures of cash flow information
 
 
 
 
 
Cash paid during the year for:
 
 
 
 
 
Interest
$
40,447

 
$
12,184

 
$
12,226

Income taxes
$
53,281

 
$
41,644

 
$
32,910

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

61
Table of Contents


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
Note 1:
Nature of Operations and Accounting Policies
 
Nature of Operations:     PerkinElmer, Inc. is a leading provider of products, services and solutions to the diagnostics, research, environmental, industrial and laboratory services markets. Through its technologies, applications and services critical issues are addressed that help to improve the health and safety of people and their environment. The results are reported within two reporting segments: Human Health and Environmental Health.
 
The consolidated financial statements include the accounts of PerkinElmer, Inc. and its subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated in consolidation.
 
The Company has two operating segments; Human Health and Environmental Health. The Company’s Human Health segment 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. Within the Human Health segment, the Company serves both the diagnostics and research markets. The Company’s Environmental Health segment provides technologies and applications 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’s fiscal year ends on the Sunday nearest December 31. The Company reports fiscal years under a 52/53 week format. Under this method, certain years will contain 53 weeks. Each of the fiscal years ended December 30, 2012 , January 1, 2012 and January 2, 2011 included 52 weeks. The fiscal year ending December 29, 2013 will also include 52 weeks.
 
The Company has evaluated subsequent events from December 30, 2012 through the date of the issuance of these consolidated financial statements and has determined that no material subsequent events have occurred that would affect the information presented in these consolidated financial statements.
 
Accounting Policies and Estimates:     The preparation of consolidated financial statements in accordance with United States (“U.S.”) Generally Accepted Accounting Principles (“GAAP”) requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
 
Revenue Recognition:     The Company’s product revenue is recorded when persuasive evidence of an arrangement exists, delivery has occurred, the price to the buyer is fixed or determinable, and collectability is reasonably assured. For products that include installation, and if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, and installation revenue is recognized when the installation is complete. For revenue that includes customer-specified acceptance criteria, revenue is recognized after the acceptance criteria have been met. Certain of the Company’s products require specialized installation. Revenue for these products is deferred until installation is completed. Revenue from services is deferred and recognized over the contractual period, or as services are rendered.

In limited circumstances, the Company has arrangements that include multiple elements that are delivered at different points of time, such as revenue from products and services with a remaining service or storage component, such as cord blood processing and storage. For these arrangements, the revenue is allocated to each of the deliverables based upon their relative selling prices as determined by a selling-price hierarchy. A deliverable in an arrangement qualifies as a separate unit of accounting if the delivered item has value to the customer on a stand-alone basis. A delivered item that does not qualify as a separate unit of accounting is combined with the other undelivered items in the arrangement and revenue is recognized for those combined deliverables as a single unit of accounting. The selling price used for each deliverable is based upon vendor-specific objective evidence ("VSOE") if such evidence is available, third-party evidence ("TPE") if VSOE is not available, and management's best estimate of selling price ("BESP") if neither VSOE nor TPE are available. TPE is the price of the Company's or any competitor's largely interchangeable products or services in stand-alone sales to similarly-situated customers. BESP is the price at which the Company would sell the deliverable if it were sold regularly on a stand-alone basis, considering market conditions and entity-specific factors.
 

62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Revenue from software licenses and services was 3% of the Company's total revenue for fiscal year 2012 , 2% of the Company's total revenue for fiscal year 2011 , and 1% of the Company's total revenue for fiscal year 2010 . The Company sells its software licenses with maintenance services and, in some cases, also with consulting services. For the undelivered elements, the Company determines VSOE of fair value to be the price charged when the undelivered element is sold separately. The Company determines VSOE for maintenance sold in connection with a software license based on the amount that will be separately charged for the maintenance renewal period. The Company determines VSOE for consulting services by reference to the amount charged for similar engagements when a software license sale is not involved.
 
The Company recognizes revenue from software licenses sold together with maintenance and/or consulting services upon shipment using the residual method, provided that the above criteria have been met. If VSOE of fair value for the undelivered elements cannot be established, the Company defers all revenue from the arrangement until the earlier of the point at which such sufficient VSOE does exist or all elements of the arrangement have been delivered, or if the only undelivered element is maintenance, then the Company recognizes the entire fee ratably over the maintenance period.
 
The Company sells products and accessories predominantly through its direct sales force. As a result, the use of distributors is generally limited to geographic regions where the Company has no direct sales force. The Company does not offer product return or exchange rights (other than those relating to defective goods under warranty) or price protection allowances to its customers, including its distributors. Payment terms granted to distributors are the same as those granted to end-user customers and payments are not dependent upon the distributors’ receipt of payment from their end-user customers. Sales incentives related to distributor revenue are also the same as those for end-user customers.

Service revenues represent the Company’s service offerings including service contracts, field service including related time and materials, diagnostic testing, cord blood processing and storage, and training. Service revenues are recognized as the service is performed. Revenues for service and storage contracts are recognized over the contract period.

In July 2011, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2011-07, Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities ("ASU No. 2011-07"). ASU No. 2011-07 establishes the accounting and reporting guidance for presentation of the provision for bad debts related to certain revenue as a deduction from revenue (net of contractual allowances and discounts) on the statements of operations. During the first quarter of fiscal year 2012 the Company adopted the new guidance for certain of its health care businesses that recognize patient service revenue at the time the services are rendered where the Company does not assess the patient's ability to pay at such time. The effects of the adoption on the Company's consolidated statements of operations resulted in a decrease to revenue and a decrease to selling, general and administrative expenses of $2.8 million , $2.8 million and $2.6 million for the fiscal years ending December 30, 2012 , January 1, 2012 and January 2, 2011 , respectively. Accordingly, the financial data for all periods presented has been retrospectively adjusted to reflect the effect of these accounting changes.
 
Warranty Costs :    The Company provides for estimated warranty costs for products at the time of their sale. Warranty liabilities are based on estimated future repair costs using historical labor and material costs incurred in the warranty period.
 
Shipping and Handling Costs:     The Company reports shipping and handling revenue in revenue, to the extent they are billed to customers, and costs in cost of product revenue.
 
Inventories :    Inventories, which include material, labor and manufacturing overhead, are valued at the lower of cost or market. Inventories are accounted for using the first-in, first-out method of determining inventory costs. Inventory quantities on-hand are regularly reviewed, and where necessary, provisions for excess and obsolete inventory are recorded based primarily on the Company’s estimated forecast of product demand and production requirements.
 
Income Taxes:     The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. This method also requires the recognition of future tax benefits such as net operating loss carryforwards, to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. A valuation allowance is established for any deferred tax asset for which realization is not more likely than not. With respect to earnings expected to be indefinitely reinvested offshore, the Company does not accrue tax for the repatriation of such foreign earnings.
 

63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions and other issues. These reserves are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present related to the tax benefit. Potential interest and penalties associated with such uncertain tax positions is recorded as a component of income tax expense. See Note 6, below, for additional details.
 
Property, Plant and Equipment:     The Company depreciates plant and equipment using the straight-line method over its estimated useful lives, which generally fall within the following ranges: buildings- 10.0 to 40.0 years; leasehold improvements-estimated useful life or remaining term of lease, whichever is shorter; machinery and equipment- 3.0 to 7.0 years. Certain tooling costs are capitalized and amortized over a 3 -year life, while repairs and maintenance costs are expensed.

Asset Retirement Obligations :    The Company records obligations associated with its lease obligations, the retirement of tangible long-lived assets and the associated asset-retirement costs in accordance with authoritative guidance on asset retirement obligations. The Company reviews legal obligations associated with the retirement of long-lived assets that result from contractual obligations or the acquisition, construction, development and/or normal use of the assets. If it is determined that a legal obligation exists, regardless of whether the obligation is conditional on a future event, the fair value of the liability for an asset retirement obligation is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset, and this additional carrying amount is depreciated over the life of the asset. The difference between the gross expected future cash flow and its present value is accreted over the life of the related lease as an operating expense. The amounts recorded in the consolidated financial statements are not material to any year presented.
 
Pension and Other Postretirement Benefits:     The Company sponsors both funded and unfunded U.S. and non-U.S. defined benefit pension plans and other postretirement benefits. The Company immediately recognizes actuarial gains and losses in operating results in the year in which the gains and losses occur. Actuarial gains and losses are measured annually as of fiscal year end and accordingly will be recorded in the fourth quarter, unless the Company is required to perform an interim remeasurement. The remaining components of pension expense, primarily service and interest costs and assumed return on plan assets, are recorded on a quarterly basis. The Company’s funding policy provides that payments to the U.S. pension trusts shall at least be equal to the minimum funding requirements of the Employee Retirement Income Security Act of 1974. Non-U.S. plans are accrued for, but generally not fully funded, and benefits are paid from operating funds.

Translation of Foreign Currencies:     For foreign operations, asset and liability accounts are translated at current exchange rates; income and expenses are translated using weighted average exchange rates for the reporting period. Resulting translation adjustments, as well as translation gains and losses from certain intercompany transactions considered permanent in nature, are reported in accumulated other comprehensive income (loss), a separate component of stockholders’ equity. Gains and losses arising from transactions and translation of period-end balances denominated in currencies other than the functional currency are included in earnings.
 
Business Combinations:     Business combinations are accounted for at fair value. Acquisition costs are expensed as incurred and recorded in selling, general and administrative expenses; previously held equity interests are valued at fair value upon the acquisition of a controlling interest; in-process research and development (“IPR&D”) is recorded at fair value as an intangible asset at the acquisition date; restructuring costs associated with a business combination are expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date affect income tax expense. The accounting for business combinations requires estimates and judgment as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair value for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of finite-lived intangible assets, or the recognition of additional consideration which would be expensed.
 
The Company adjusted the balance sheet amounts at January 1, 2012, where appropriate, to account for the measurement period adjustments related to the Caliper Life Sciences, Inc. (“Caliper”) purchase price allocation discussed in Note 2, below.
 
Goodwill and Other Intangible Assets:     The Company’s intangible assets consist of (i) goodwill, which is not being amortized; (ii) indefinite lived intangibles, which consist of certain trademarks and trade names that are not subject to amortization; and (iii) amortizing intangibles, which consist of patents, customer relationships, and purchased technologies, which are being amortized over their estimated useful lives.

64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


 
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. This annual impairment assessment is performed by the Company on the later of January 1 or the first day of each fiscal year. This same impairment test will be performed at other times during the course of the year, should an event occur which suggests that the recoverability of goodwill should be reconsidered. Non-amortizing intangibles are also subject to an annual impairment test. The impairment test consists of a comparison of the fair value of the non-amortizing intangible asset with its carrying amount. If the carrying amount of a non-amortizing intangible asset exceeds its fair value, an impairment loss in an amount equal to that excess is recognized . In addition, the Company evaluates the remaining useful life 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 life and accounted for in the same manner as other intangible assets that are subject to amortization. Recoverability of amortizing intangible assets is assessed only when events have occurred that may give rise to impairment. When a potential impairment has been identified, forecasted undiscounted net cash flows of the operations to which the asset relates are compared to the current carrying value of the long-lived assets present in that operation. If such cash flows are less than such carrying amounts, long-lived assets, including such intangibles, are written down to their respective fair values. See Note 12, below, for additional details.
 
Stock-Based Compensation:     The Company accounts for stock-based compensation expense based on estimated grant date fair value, generally using the Black-Scholes option-pricing model. The fair value is recognized, net of estimated forfeitures, as expense in the consolidated financial statements over the requisite service period. The determination of fair value and the timing of expense using option pricing models such as the Black-Scholes model require the input of highly subjective assumptions, including the expected forfeiture rate, life of the option and the expected price volatility of the underlying stock. The Company estimates the expected forfeiture and expected life assumptions based on historical experience. In determining the Company’s expected stock price volatility assumption, the Company reviews both the historical and implied volatility of the Company’s common stock, with implied volatility based on the implied volatility of publicly traded options on the Company’s common stock. Beginning in fiscal year 2009, the Company has one stock-based compensation plan from which it makes grants, which is described more fully in Note 18, below.
 
Marketable Securities and Investments:     The cost of securities sold is based on the specific identification method. If securities are classified as available for sale, the Company records these investments at their fair values with unrealized gains and losses included in accumulated other comprehensive income. Under the cost method of accounting, equity investments in private companies are carried at cost and are adjusted for other-than-temporary declines in fair value, additional investments or distributions.

Cash Flows:     For purposes of the consolidated statements of cash flows, the Company considers all highly liquid unrestricted instruments with a purchased maturity of three months or less to be cash equivalents. The carrying amount of cash and cash equivalents approximates fair value due to the short maturities of these instruments.

Environmental Matters:     The Company accrues for costs associated with the remediation of environmental pollution when it is probable that a liability has been incurred and the Company’s proportionate share of the amount can be reasonably estimated. The recorded liabilities have not been discounted.
 
Research and Development:     Research and development costs are expensed as incurred. The fair value of acquired IPR&D costs is recorded at fair value as an intangible asset at the acquisition date and amortized once the product is ready for sale or expensed if abandoned.
 
Restructuring Charges:     In recent fiscal years, the Company has undertaken a series of restructuring actions related to the alignment with the Company’s growth strategy, the impact of acquisitions, divestitures and the integration of its business units. In connection with these initiatives, the Company has recorded restructuring charges, as more fully described in Note 4, below. Generally, costs associated with an exit or disposal activity are recognized when the liability is incurred. Costs related to employee separation arrangements requiring future service beyond a specified minimum retention period are recognized over the service period.
 

65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Comprehensive Income:     In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income ( Topic 220 ) as amended, requiring amendments to disclosure for presentation of comprehensive income. This guidance requires presentation of total comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In December 2011, the FASB issued an amendment to this guidance which indefinitely defers the requirement to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented. This guidance is effective for annual periods beginning after December 15, 2011. The Company early adopted the amended guidance requiring presentation of comprehensive income in two consecutive financial statements for the fiscal year ended January 1, 2012 . The implementation of this guidance did not have a material impact on the Company's consolidated results of operations or financial position.
 
Comprehensive income is defined as net income or loss and other changes in stockholders’ equity from transactions and other events from sources other than stockholders. Comprehensive income is reflected in the consolidated statements of comprehensive income.
 
Derivative Instruments and Hedging:     Derivatives are recorded on the consolidated balance sheets at fair value. Accounting for gains or losses resulting from changes in the values of those derivatives depends on the use of the derivative instrument and whether it qualifies for hedge accounting.
 
For a cash flow hedge, the effective portion of the derivative’s gain or loss is initially reported as a component of other comprehensive (loss) income and subsequently amortized into net earnings when the hedged exposure affects net earnings. Cash flow hedges related to anticipated transactions are designated and documented at the inception of each hedge by matching the terms of the contract to the underlying transaction. The Company classifies the cash flows from hedging transactions in the same categories as the cash flows from the respective hedged items. Once established, cash flow hedges are generally recorded in other comprehensive income, unless an anticipated transaction is no longer likely to occur, and subsequently amortized into net earnings when the hedged exposure affects net earnings. Discontinued or dedesignated cash flow hedges are immediately settled with counterparties, and the related accumulated derivative gains or losses are recognized into net earnings on the consolidated financial statements. Settled cash flow hedges related to forecasted transactions that remain probable are recorded as a component of other comprehensive income and are subsequently amortized into net earnings when the hedged exposure affects net earnings. Forward contract effectiveness for cash flow hedges is calculated by comparing the fair value of the contract to the change in value of the anticipated transaction using forward rates on a monthly basis. As of December 30, 2012 , the Company had cash flow hedges outstanding with Euro denominated notional amounts of Euro 50.0 million , and as of January 1, 2012 , the Company had no outstanding cash flow hedges. The Company also has entered into foreign currency forward contracts that are not designated as hedging instruments for accounting purposes. These contracts are recorded at fair value, with the changes in fair value recognized into net earnings on the consolidated financial statements.
 
Recently Issued Accounting Pronouncements:     From time to time, new accounting pronouncements are issued by the FASB and are adopted by the Company as of the specified effective dates. The Company believes that the impact of recently issued pronouncements will not have a material impact on the Company's consolidated financial position, results of operations, and cash flows or do not apply to the Company's operations.

Note 2:
Business Combinations
 
Acquisition of Haoyuan Biotech Co., Ltd.  In November 2012, the Company acquired all outstanding stock of Shanghai Haoyuan Biotech Co., Ltd. ("Haoyuan"). Haoyuan is a provider of nucleic acid-based blood screening solutions for the blood banking and clinical diagnostics markets. The Company expects this acquisition to extend the Company's capabilities into nucleic acid blood screening, as well as deepen its position in the growing molecular clinical diagnostics market in China. The Company paid the shareholders of Haoyuan $38.0 million in cash for the stock of Haoyuan. The Company recorded a receivable of $2.7 million from the shareholders of Haoyuan as a reduction of purchase price for the settlement of certain contingencies. As of the closing date, the Company potentially had to pay the shareholders additional contingent consideration of up to $30.0 million , which at closing had an estimated fair value of $1.9 million . 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 reported the operations for this acquisition within the results of the Company’s Human Health segment from the acquisition date.


66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The total purchase price has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:
 
Haoyuan
(Preliminary)
 
(In thousands)
Fair value of business combination:
 
Cash payments
$
38,000

Contingent consideration
1,900

Working capital and other adjustments
(2,729
)
Less: cash acquired
(175
)
Total
$
36,996

Identifiable assets acquired and liabilities assumed:
 
Current assets
$
2,389

Property, plant and equipment
2,906

Identifiable intangible assets:
 
Core technology
17,700

Trade names
400

IPR&D
300

Goodwill
19,682

Deferred taxes
(2,656
)
Deferred revenue
—

Liabilities assumed
(3,725
)
Total
$
36,996

 
The weighted average amortization periods of identifiable definite-lived intangible assets for core technology and trade names were 8.0 years .

Acquisition of Caliper Life Sciences, Inc.  In November 2011, the Company acquired all of the outstanding stock of Caliper Life Sciences, Inc. Caliper is a provider of imaging and detection solutions for life sciences research, diagnostics and environmental markets. Caliper develops and sells integrated systems, consisting of instruments, software, reagents, laboratory automation tools, and assay development and discovery services, primarily to pharmaceutical, biotechnology, and diagnostics companies, and government and other not-for-profit research institutions. The Company expects this acquisition to enhance its molecular imaging and detection technologies and to complement its offerings in life science, diagnostics, environmental and food markets. The Company paid the shareholders of Caliper $646.3 million in cash for the stock of Caliper. The Company financed the acquisition by issuing $500.0 million aggregate principal amount of senior unsecured notes due 2021 (the “2021 Notes”) in a registered public offering and received approximately $496.9 million of net proceeds from the issuance, with the remainder of the purchase price paid from available cash. 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 Human Health segment from the acquisition date.

67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The total purchase price has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:
  
 
Caliper
 
(In thousands)
Fair value of business combination:
 
Cash payments
$
646,317

Less: cash acquired
(43,576
)
Total
$
602,741

Identifiable assets acquired and liabilities assumed:
 
Current assets
$
55,027

Property, plant and equipment
14,580

Identifiable intangible assets:
 
Core technology
52,000

Trade names
14,200

Licenses
18,000

Customer relationships
93,000

Goodwill
353,103

Deferred taxes
52,472

Deferred revenue
(6,554
)
Liabilities assumed
(43,087
)
Total
$
602,741

 
The weighted average amortization periods of identifiable definite-lived intangible assets were 5.0 years for core technology, 6.0 years for licenses, 7.0 years for customer relationships, and 7.0 years for trade names.
 
Caliper's revenue and pre-tax loss from continuing operations for the period from the acquisition date to January 1, 2012 were $29.3 million and $3.0 million , respectively. The following unaudited pro forma information presents the combined financial results for the Company and Caliper as if the acquisition of Caliper had been completed at the beginning of fiscal year 2010:
 
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Pro Forma Statement of Operations Information (Unaudited):
 
 
 
Revenue
$
2,042,730

 
$
1,821,435

(Loss) income from continuing operations
(25,854
)
 
85,961

Basic (loss) earnings per share:
 
 
 
Continuing operations
$
(0.23
)
 
$
0.73

Diluted (loss) earnings per share:
 
 
 
Continuing operations
$
(0.23
)
 
$
0.73


The unaudited pro forma information for fiscal years 2011 and 2010 have been calculated after applying the Company's accounting policies and the impact of acquisition date fair value adjustments. The fiscal year 2011 unaudited pro forma loss from continuing operations was adjusted to exclude approximately $18.1 million of acquisition-related transaction costs. In addition, the fiscal year 2011 unaudited pro forma loss from continuing operations was adjusted to exclude nonrecurring expenses related to the fair value adjustments associated with the acquisition of Caliper that were recorded by the Company related to the completion of this acquisition. The fiscal year 2010 pro forma income from continuing operations was adjusted to include these acquisition-related transaction costs and the nonrecurring expenses related to the fair value adjustments. These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments, such as fair value adjustment to inventory and deferred revenue, increased interest expense on debt obtained to finance the transaction, and increased amortization for the fair value of acquired intangible assets. The pro forma information

68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


does not reflect the effect of costs or synergies that would have been expected to result from the integration of the acquisition. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the combination occurred at the beginning of each period presented, or of future results of the consolidated entities.
During fiscal year 2012, the Company obtained information to assist in determining the fair values of certain tangible and intangible assets acquired and liabilities assumed as of the Caliper acquisition date. Based on such information, the Company retrospectively adjusted the fiscal year 2011 comparative information resulting in an increase in other current assets of $20.8 million , an increase in goodwill of $0.6 million , and an increase in long-term liabilities of $22.8 million , offset by a decrease in accrued expenses of $1.4 million . There were no changes to the previously reported consolidated statements of operations or statements of cash flows.
 
Acquisition of Dexela Limited.  In June 2011, the Company acquired all of the outstanding stock of Dexela Limited (“Dexela”). Dexela is a provider of flat panel complementary metal-oxide-semiconductor (“CMOS”) x-ray detection technologies and services. The Company expects this acquisition to expand its current medical imaging portfolio in key areas including surgery, dental, cardiology and mammography, as well as non-destructive testing. With the addition of the CMOS technology to the Company’s imaging portfolio, customers will be able to choose between two complementary x-ray detector technologies to optimize their system performance and meet their specific application needs. The Company paid the shareholders of Dexela $26.1 million in cash for the stock of Dexela. As of the closing date, the Company potentially had to pay additional contingent consideration of up to $12.2 million , which at closing had an estimated fair value of $4.6 million . 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 Human Health segment from the acquisition date.
 
Acquisition of Labtronics, Inc.  In May 2011, the Company acquired all of the outstanding stock of Labtronics, Inc. (“Labtronics”). Labtronics is a provider of procedures-based Electronic Laboratory Notebook (“ELN”) solutions for laboratories performing routine analysis in multiple industries. The Company expects this acquisition to extend its ELN and data integration software offerings into laboratories following strict routine procedures, late stage product or method development laboratories and environmental and food testing laboratories. Labtronics tools can be applied to procedure-based problems, including laboratory analysis, equipment calibration and validation, cleaning validation and other problems. The Company paid the shareholders of Labtronics $11.4 million in cash for the stock of Labtronics. 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.
 
Acquisition of Geospiza, Inc.  In May 2011, the Company acquired all of the outstanding stock of Geospiza, Inc. (“Geospiza”). Geospiza is a developer of software systems for the management of genetic analysis and laboratory workflows. Geospiza primarily services biotechnology and pharmaceutical companies, universities, researchers, contract core and diagnostic laboratories involved in genetic testing and manufacturing bio-therapeutics by meeting their combined laboratory, data management and analytical needs. The Company expects this acquisition to enhance its software offerings, which will enable researchers to explore the genomic origins of disease effectively, and help address customers’ growing needs to manage knowledge and improve scientific productivity. The Company paid the shareholders of Geospiza $13.2 million in cash for the stock of Geospiza. 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 Human Health segment from the acquisition date.
 
Acquisition of CambridgeSoft Corporation.  In April 2011, the Company acquired all of the outstanding stock of CambridgeSoft Corporation (“CambridgeSoft”). CambridgeSoft is a provider of discovery, collaboration and knowledge enterprise solutions, scientific databases and professional services. CambridgeSoft primarily services pharmaceutical, biotechnology and chemical industries with solutions that help customers create, analyze and communicate scientific data while improving the speed, quality, efficiency and predictability of research and development investments. The Company expects this acquisition to enhance its focus on knowledge management in laboratory settings by expanding its software offerings, enabling customers to share data used for scientific decisions. The Company paid the shareholders of CambridgeSoft $227.4 million in cash at the closing for the stock of CambridgeSoft and recorded a receivable of $4.2 million from the shareholders of CambridgeSoft as a reduction of purchase price for the settlement of contingencies. During the fourth quarter of fiscal year 2012 , the Company settled the contingencies and collected the receivable. 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

69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Company has reported the operations for this acquisition within the results of the Company’s Environmental Health segment from the acquisition date.
 
Acquisition of ID Biological Systems, Inc.  In March 2011, the Company acquired specified assets and assumed specified liabilities of ID Biological Systems, Inc. (“IDB”). IDB is a manufacturer of filter paper-based sample collection devices for neonatal screening and prenatal diagnostics. The Company expects this acquisition to enhance its market position in the prenatal and neonatal markets. The Company paid $7.7 million in cash at the closing for this transaction. As of the closing date, the Company potentially had to pay additional contingent consideration of up to $3.3 million , which at closing had an estimated fair value of $0.3 million . 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, all of which is tax deductible. The Company has reported the operations for this acquisition within the results of the Company’s Human Health segment from the acquisition date.
 
Acquisition of ArtusLabs, Inc.  In March 2011, the Company acquired all of the outstanding stock of ArtusLabs, Inc. (“ArtusLabs”). ArtusLabs offers the Ensemble ® scientific knowledge platform, to accelerate research and development in the pharmaceutical, chemical, petrochemical and related industries. Ensemble ® integrates disparate data from customers’ ELNs and informatics systems and databases. The Company expects this acquisition to enhance its focus on knowledge management in laboratory settings by expanding its informatics offerings, enabling customers to rapidly access enterprise-wide data. The Company paid the shareholders of ArtusLabs $15.2 million in cash at the closing for the stock of ArtusLabs. As of the closing date, the Company potentially had to pay additional contingent consideration of up to $15.0 million , which at closing had an estimated fair value of $7.5 million . 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.
 
Acquisition of chemagen Biopolymer-Technologie AG.  In February 2011, the Company acquired all of the outstanding stock of chemagen Biopolymer-Technologie AG (“chemagen”). chemagen manufactures and sells nucleic acid sample preparation systems and reagents utilizing magnetic bead technology. The Company expects this acquisition to enhance its diagnostics business by expanding the Company’s product offerings to diagnostics, academic and industrial end markets. The Company paid the shareholders of chemagen $34.6 million in cash for the stock of chemagen. As of the closing date, the Company potentially had to pay additional contingent consideration of up to $20.3 million , which at closing had an estimated fair value of $7.7 million . 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 Human Health segment from the acquisition date.
 

70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


In addition to the information provided above for the Caliper acquisition, the components of the fair values of the business combinations and allocations for all other acquisitions completed in fiscal year 2011 are as follows:
 
 
chemagen
 
ArtusLabs
 
IDB
 
CambridgeSoft
 
Geospiza
 
Labtronics
 
Dexela
 
(In thousands)
Fair value of business combination:
Cash payments
$
33,873

 
$
15,232

 
$
7,664

 
$
227,373

 
$
13,250

 
$
11,389

 
$
24,800

Fair values of stock options assumed
—

 
—

 
—

 
1,417

 
—

 
—

 
—

Contingent consideration
7,723

 
7,475

 
326

 
—

 
—

 
—

 
4,600

Working capital and other adjustments
762

 
—

 
—

 
(4,156
)
 
729

 
29

 
1,251

Less: cash acquired
(901
)
 
(125
)
 
(27
)
 
(23,621
)
 
(1
)
 
(207
)
 
(2,041
)
Total
$
41,457

 
$
22,582

 
$
7,963

 
$
201,013

 
$
13,978

 
$
11,211

 
$
28,610

Identifiable assets acquired and liabilities assumed:
Current assets
$
2,288

 
$
199

 
$
635

 
$
10,752

 
$
204

 
$
925

 
$
1,854

Property, plant and equipment
290

 
7

 
699

 
462

 
—

 
70

 
133

Identifiable intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Core technology
6,910

 
4,550

 
—

 
17,300

 
1,960

 
1,404

 
3,600

Trade names
542

 
—

 
—

 
2,800

 
—

 
32

 
—

Licenses
—

 
—

 
—

 
—

 
—

 
—

 
3,000

Customer relationships
4,877

 
—

 
2,610

 
80,100

 
1,900

 
1,823

 
5,600

IPR&D
2,439

 
200

 
—

 
1,200

 
—

 
—

 
—

Goodwill
29,347

 
18,115

 
4,657

 
148,577

 
9,838

 
8,520

 
17,519

Deferred taxes
(4,402
)
 
(46
)
 
—

 
(38,939
)
 
765

 
(975
)
 
(1,420
)
Deferred revenue
—

 
(297
)
 
—

 
(9,504
)
 
(380
)
 
(315
)
 
—

Liabilities assumed
(834
)
 
(146
)
 
(638
)
 
(11,735
)
 
(309
)
 
(273
)
 
(1,676
)
Total
$
41,457

 
$
22,582

 
$
7,963

 
$
201,013

 
$
13,978

 
$
11,211

 
$
28,610

 
Identifiable definite-lived intangible assets, such as customer relationships, core technology, IPR&D, licenses, and trade names, acquired as part of the acquisitions completed in fiscal year 2011 had weighted average amortization periods between 7.0 years and 11.0 years. The fair values of stock options assumed were estimated using a Black-Scholes option-pricing model. The fair values of unvested stock options as they relate to post-combination services will be recorded in selling, general and administrative expenses over the remaining service periods, while the fair values of vested stock options as they relate to pre-combination services are included in the purchase price of the acquired entity.
 
The Company does not consider the acquisitions completed during fiscal years 2012 and 2011 , with the exception of the Caliper acquisition, to be material to its consolidated results of operations; therefore, the Company is not presenting pro forma financial information of operations. The aggregate revenue and results of operations for Haoyuan for the period from the acquisition date to December 30, 2012 were minimal. The aggregate revenue for the acquisitions, with the exception of Caliper, completed during fiscal year 2011 for the period from their respective acquisition dates to January 1, 2012 was $32.4 million . The Company has also determined that the presentation of the results of operations for each of those acquisitions, from the date of acquisition, is impracticable due to the integration of the operations upon acquisition.
 
As of December 30, 2012 , with the exception of the purchase price allocation for the Haoyuan acquisition, the purchase price allocations for acquisitions completed in fiscal years 2012 and 2011 were final. The preliminary allocation of the purchase price for the Haoyuan acquisition was based upon an initial valuation and the Company's estimates and assumptions underlying the initial valuation are subject to change within the measurement period (up to one year from the acquisition date). The primary areas of the preliminary purchase price allocation 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 date during the measurement period. During the measurement period, the Company will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the

71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. Adjustments to the preliminary allocation of the purchase price during the measurement period require the revision of comparative prior period financial information when reissued in subsequent financial statements. The effect of adjustments to the allocation of the purchase price made during the measurement period would be as if the adjustments had been completed on the acquisition date. The effects of any such adjustments, if material, will cause changes in depreciation, amortization, or other income or expense recognized in prior periods. All changes that do not qualify as adjustments made during the measurement period are 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 all acquisitions with open contingency periods, of up to $61.3 million as of December 30, 2012 . As of December 30, 2012 , the Company had recorded contingent consideration obligations relating to its acquisitions of Dexela and Haoyuan, with an estimated fair value of $3.0 million . The earnout periods for each of these acquisitions do not exceed three years from the acquisition date. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the consolidated financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of definite-lived intangible assets. or the recognition of additional consideration which would be expensed.

In connection with the purchase price allocations for acquisitions, the Company estimates the fair value of deferred revenue assumed with its acquisitions. The estimated fair value of deferred revenue is determined by the legal performance obligation at the date of acquisition, and is generally based on the nature of the activities to be performed and the related costs to be incurred after the acquisition date. The fair value of an assumed liability related to deferred revenue is estimated based on the current market cost of fulfilling the obligation, plus a normal profit margin thereon. The estimated costs to fulfill the deferred revenue are based on the historical direct costs related to providing the services. The Company does not include any costs associated with selling effort, research and development, or the related fulfillment margins on these costs. In most acquisitions, profit associated with selling effort is excluded because the acquired businesses would have concluded the selling effort on the support contracts prior to the acquisition date. The estimated research and development costs are not included in the fair value determination, as these costs are not deemed to represent a legal obligation at the time of acquisition. The sum of the costs and operating income approximates, in theory, the amount that the Company would be required to pay a third-party to assume the obligation.

Total transaction costs related to acquisition activities for fiscal years 2012, 2011, and 2010 were $1.2 million , $10.7 million and $2.6 million , respectively. These transaction costs were expensed as incurred and recorded in selling, general and administrative expenses in the Company's 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. The assets and liabilities of these businesses have been presented separately, and are reflected within the assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of December 30, 2012 and January 1, 2012 .
 

72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The Company recorded the following pre-tax gains and losses, which have been reported as a net gain on disposition of discontinued operations during the three fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
(Loss) gain on disposition of Illumination and Detection Solutions business
$
(57
)
 
$
(1,787
)
 
$
315,324

Gain (loss) on disposition of Photoflash business
2,459

 
(134
)
 
4,369

Net gain (loss) on disposition of other discontinued operations
3

 
3,920

 
(1,797
)
Net gain on disposition of discontinued operations before income taxes
$
2,405

 
$
1,999

 
$
317,896

 
In November 2010, the Company sold its Illumination and Detection Solutions (“IDS”) business, which was included in the Company’s Environmental Health segment, for $510.3 million including an adjustment for net working capital, to reduce the complexity of its product offerings and organizational structure, and to provide capital to reinvest in other Human Health and Environmental Health end markets. The buyer acquired the Company’s IDS business through the purchase of all outstanding stock of certain of the Company’s subsidiaries located in Germany, Canada, China, Indonesia, the Philippines, the United Kingdom and the United States as well as the purchase of related assets and the assumption of liabilities held by the Company and certain of its subsidiaries located in Singapore and Germany. The Company recognized a pre-tax gain of $315.3 million , inclusive of the net working capital adjustment, in the fourth quarter of fiscal year 2010 as a result of the sale of its IDS business. During fiscal year 2011, the Company updated the net working capital adjustment associated with the sale of this business and other potential contingencies, which resulted in the recognition of a pre-tax loss of $1.8 million . These gains and losses were recognized as gain (loss) on disposition of discontinued operations.
 
In December 2008, the Company’s management approved a plan to divest its Photoflash business within the Environmental Health segment. In June 2010, the Company sold the Photoflash business for $13.5 million , including an adjustment for net working capital, plus potential additional contingent consideration. The Company recognized a pre-tax gain of $4.4 million , inclusive of the net working capital adjustment, in fiscal year 2010 as a result of the sale. During the fiscal year 2012, the Company recognized a pre-tax gain of $2.5 million for contingent consideration related to this sale. These gains were recognized as a gain on disposition of discontinued operations.
 
During fiscal years 2012, 2011, and 2010 , the Company settled various commitments related to the divestiture of other discontinued operations. The Company recognized a pre-tax gain of $3.9 million in fiscal year 2011 and a pre-tax loss of $1.8 million in fiscal year 2010 . The fiscal year 2011 pre-tax gain included $4.0 million for contingent consideration related to the sale of the Company's semiconductor business in fiscal year 2006.
 
Summary pre-tax operating results of the discontinued operations for the periods prior to disposition were as follows for the fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Revenue
$
—

 
$
—

 
$
288,713

Costs and expenses
—

 
—

 
257,281

Operating income from discontinued operations
—

 
—

 
31,432

Other expenses, net
—

 
—

 
660

Income from discontinued operations before income taxes
$
—

 
$
—

 
$
30,772

 
The Company recognized a tax provision of $0.9 million on discontinued operations in fiscal year 2012 , a tax benefit of $4.5 million on discontinued operations in fiscal year 2011 and a tax provision of $96.6 million in fiscal year 2010 on discontinued operations. The recognition of $4.5 million income tax benefit in fiscal year 2011 is primarily the net result of a change in estimate related to the federal income tax liability associated with the repatriation of the unremitted earnings of the IDS and Photoflash businesses, as further described in Note 6, below, offset by the tax provision on the contingent consideration received in fiscal year 2011 related to the sale of the Company's semiconductor business in fiscal year 2006. The recognition of $96.6 million income tax expense in fiscal year 2010 includes $16.0 million of income tax expense associated with unremitted earnings of directly-owned foreign subsidiaries that no longer qualified as indefinitely reinvested once the subsidiary was held for sale, and $65.8 million related to the federal income tax liability associated with the repatriation of the unremitted earnings of the IDS and Photoflash businesses, as further described in Note 6, below.

73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


 
Note 4:
Restructuring and Contract Termination Charges, Net
 
The Company has undertaken a series of restructuring actions related to the impact of acquisitions and divestitures, alignment with the Company’s growth strategy and the integration of its business units. The current portion of restructuring and contract termination charges, net, is recorded in accrued restructuring, and the long-term portion of restructuring and contract termination charges, net, 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 restructuring plans for the fourth quarter of fiscal year 2012 and fourth and second quarter of fiscal year 2011 were intended principally to shift resources to higher growth geographic regions and end markets. The restructuring plan for the third quarter of fiscal year 2012 was intended to shift certain of the Company's operations into a newly established shared service center. The restructuring plans for the first and second quarters of fiscal year 2012 were intended principally to realign operations, research and development resources, and production resources as a result of recent acquisitions.
 
A description of the restructuring plans and the activity recorded are as follows:

Q4 2012 Restructuring Plan
During the fourth quarter of fiscal year 2012, the Company’s management approved a plan to shift resources to higher growth geographic regions and end markets (the “Q4 2012 Plan”). As a result of the Q4 2012 Plan, the Company recognized a $0.6 million pre-tax restructuring charge in the Human Health segment related to a workforce reduction from reorganization activities and recognized a $2.4 million pre-tax restructuring charge in the Environmental Health segment related to a workforce reduction from reorganization activities. As part of the Q4 2012 Plan, the Company reduced headcount by 54 employees. All employees were notified of termination under the Q4 2012 Plan by December 30, 2012.
 
The following table summarizes the Q4 2012 Plan activity:
 
Severance
 
(In thousands)
Provision
$
2,936

Amounts paid and foreign currency translation
(254
)
Balance at December 30, 2012
$
2,682

 
The Company anticipates that the remaining severance payments of $2.7 million for workforce reductions will be completed by the end of the second quarter of fiscal year 2014.
 
Q3 2012 Restructuring Plan
During the third quarter of fiscal year 2012, the Company’s management approved a plan to shift certain of the Company's operations into a newly established shared service center (the “Q3 2012 Plan”). As a result of the Q3 2012 Plan, the Company recognized $3.7 million pre-tax restructuring charges in each of the Human Health and Environmental Health segments related to a workforce reduction from reorganization activities. During fiscal year 2012 , the Company also recorded an additional pre-tax restructuring accrual of $0.3 million relating to the Q3 2012 plan due to higher than expected costs associated with the workforce reduction from reorganization activities within both the Human Health and Environmental Health segments. As part of the Q3 2012 Plan, the Company will reduce headcount by 66 employees. All employees were notified of termination under the Q3 2012 Plan by September 30, 2012.

The following table summarizes the Q3 2012 Plan activity:
 
Severance
 
(In thousands)
Provision
$
7,446

Change in estimate
326

Amounts paid and foreign currency translation
(219
)
Balance at December 30, 2012
$
7,553

 

74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The Company anticipates that the remaining severance payments of $7.6 million for workforce reductions will be completed by the end of the fourth quarter of fiscal year 2015.
Q2 2012 Restructuring Plan
During the second quarter of fiscal year 2012, the Company’s management approved a plan to realign operations, research and development resources, and production resources as a result of recent acquisitions (the “Q2 2012 Plan”). As a result of the Q2 2012 Plan, the Company recognized a $7.2 million pre-tax restructuring charge in the Human Health segment related to a workforce reduction from reorganization activities and recognized a $0.2 million pre-tax restructuring charge in the Environmental Health segment related to a workforce reduction from reorganization activities throughout fiscal year 2012. The Company expects to recognize an additional $2.2 million of incremental restructuring expense in future periods as services are provided for one-time termination benefits in which the employee is required to render service until termination in order to receive the benefits. Such benefits will be recognized ratably over the required service period. As part of the Q2 2012 Plan, the Company will reduce headcount by 205 employees. All employees were notified of termination under the Q2 2012 Plan by July 1, 2012.
 
The following table summarizes the Q2 2012 Plan activity:
 
Severance
 
(In thousands)
Provision
$
7,422

Amounts paid and foreign currency translation
(2,836
)
Balance at December 30, 2012
$
4,586

The Company anticipates that the remaining severance payments of $4.6 million for workforce reductions will be completed by the end of the second quarter of fiscal year 2014.
Q1 2012 Restructuring Plan
During the first quarter of fiscal year 2012, the Company’s management approved a plan to realign operations and production resources as a result of recent acquisitions (the “Q1 2012 Plan”). As a result of the Q1 2012 Plan, the Company recognized a $5.4 million pre-tax restructuring charge in the Human Health segment related to a workforce reduction from reorganization activities and the closure of excess facility space and recognized a $1.0 million pre-tax restructuring charge in the Environmental Health segment related to a workforce reduction from reorganization activities throughout fiscal year 2012. The Company expects to recognize no additional incremental restructuring expense in future periods as all services were provided for one-time termination benefits in which the employee was required to render service until termination in order to receive the benefits. As part of the Q1 2012 Plan, the Company will reduce headcount by 112 employees. All employees were notified of termination and the Company completed all actions related to the closure of excess facility space under the Q1 2012 Plan by April 1, 2012.
 
The following table summarizes the Q1 2012 Plan activity:
 
Severance
 
Closure of
Excess Facility
Space
 
Total
 
(In thousands)
Provision
$
6,315

 
$
79

 
$
6,394

Amounts paid and foreign currency translation
(5,034
)
 
(79
)
 
(5,113
)
Balance at December 30, 2012
$
1,281

 
$
—

 
$
1,281

The Company anticipates that the remaining severance payments of $1.3 million for workforce reductions will be completed by the end of the fourth quarter of fiscal year 2013.


75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Q4 2011 Restructuring Plan
During the fourth quarter of fiscal year 2011, the Company’s management approved a plan to shift resources to higher growth geographic regions and end markets (the “Q4 2011 Plan”). As a result of the Q4 2011 Plan, the Company recognized a $2.3 million pre-tax restructuring charge in the Human Health segment related to a workforce reduction from reorganization activities and recognized a $4.6 million pre-tax restructuring charge in the Environmental Health segment related to a workforce reduction from reorganization activities and the closure of excess facility space. During fiscal year 2012 , the Company recorded a pre-tax restructuring reversal of $0.1 million relating to the Q4 2011 Plan due to a reduction in the estimated costs associated with the closure of an excess facility in the Environmental Health segment. As part of the Q4 2011 Plan, the Company reduced headcount by 114 employees. All employees were notified of termination and the Company completed all actions related to the closure of excess facility space under the Q4 2011 Plan by January 1, 2012.
  
The following table summarizes the Q4 2011 Plan activity:
 
Severance
 
Closure of
Excess Facility
Space
 
Total
 
(In thousands)
Provision
$
6,605

 
$
370

 
$
6,975

Amounts paid and foreign currency translation
(1,931
)
 
—

 
(1,931
)
Balance at January 1, 2012
4,674

 
370

 
5,044

Change in estimates
—

 
(135
)
 
(135
)
Amounts paid and foreign currency translation
(4,140
)
 
(235
)
 
(4,375
)
Balance at December 30, 2012
$
534

 
$
—

 
$
534


The Company anticipates that the remaining severance payments of $0.5 million for workforce reductions will be completed by the end of the second quarter of fiscal year 2013.
 
Q2 2011 Restructuring Plan
During the second quarter of fiscal year 2011, the Company’s management approved a plan to shift resources to higher growth geographic regions and end markets (the “Q2 2011 Plan”). As a result of the Q2 2011 Plan, the Company recognized a $2.2 million pre-tax restructuring charge in the Human Health segment related to a workforce reduction from reorganization activities and the closure of excess facility space. The Company also recognized a $3.4 million pre-tax restructuring charge in the Environmental Health segment related to a workforce reduction from reorganization activities and the closure of excess facility space. During the fiscal year 2012 , the Company recorded a reversal of the pre-tax restructuring accrual of $0.2 million relating to the Q2 2011 Plan due to lower than expected costs associated with the workforce reduction from reorganization activities within the Environmental Health segment. As part of the Q2 2011 Plan, the Company reduced headcount by 72 employees. All employees were notified of termination and the Company completed all actions related to the closure of excess facility space under the Q2 2011 Plan by July 3, 2011.
The following table summarizes the Q2 2011 Plan activity:
 
Severance
 
Closure of
Excess Facility
Space
 
Total
 
(In thousands)
Provision
$
4,927

 
$
659

 
$
5,586

Amounts paid and foreign currency translation
(3,644
)
 
(659
)
 
(4,303
)
Balance at January 1, 2012
1,283

 
—

 
1,283

Change in estimate
(216
)
 
—

 
(216
)
Amounts paid and foreign currency translation
(504
)
 
—

 
(504
)
Balance at December 30, 2012
$
563

 
$
—

 
$
563

The Company anticipates that the remaining severance payments of $0.6 million for workforce reductions will be completed by the end of the second quarter of fiscal year 2013.
  

76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Previous Restructuring and Integration Plans
The principal actions of the restructuring and integration plans from fiscal years 2001 through 2010 were workforce reductions related to the integration of the Company’s businesses in order to reduce costs and achieve operational efficiencies as well as workforce reductions in both the Human Health and Environmental Health segments by shifting resources into geographic regions and end markets that are more consistent with the Company’s growth strategy. During fiscal year 2012 , the Company paid $4.0 million related to these plans and recorded an additional charge of $0.2 million related to higher than expected costs associated with workforce reductions in Europe within the Human Health segment, as well as a reversal of $0.7 million primarily related to a reduction in the estimated sublease rental payments reasonably expected to be obtained for an excess facility in Europe within the Environmental Health segment. As of December 30, 2012 , the Company had approximately $10.0 million of remaining liabilities associated with these restructuring and integration plans, primarily for residual lease obligations related to closed facilities and remaining severance payments for workforce reductions in both the Human Health and Environmental Health segments. The Company expects to make payments for these leases, the terms of which vary in length, through fiscal year 2022.
 
Contract Termination Charges
The Company has terminated various contractual commitments in connection with certain disposal activities and has recorded charges, to the extent applicable, for the costs of terminating these contracts before the end of their terms and the costs that will continue to be incurred for the remaining terms without economic benefit to the Company. The Company recorded a pre-tax charge of $1.5 million in fiscal year 2012 , a pre-tax charge of $2.0 million in fiscal year 2011 and a pre-tax charge of $0.1 million in fiscal year 2010 primarily as a result of terminating various contractual commitments in the Environmental Health segment. The Company made payments for these obligations of $2.9 million during fiscal year 2012 , $0.4 million during fiscal year 2011 , and $1.7 million during fiscal year 2010 . The remaining balance of these accruals as of December 30, 2012 was $0.6 million .

Note 5:
Interest and Other Expense (Income), Net
 
Interest and other expense (income), net, consisted of the following for the fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Interest income
$
(747
)
 
$
(1,884
)
 
$
(832
)
Interest expense
45,787

 
24,783

 
15,891

Gains on step acquisition
—

 
—

 
(25,586
)
Other expense, net
2,916

 
3,875

 
2,144

Total interest and other expense (income), net
$
47,956

 
$
26,774

 
$
(8,383
)
 
In fiscal year 2010, the Company acquired the remaining fifty percent equity interest in its joint venture (the "ICPMS Joint Venture") with the company previously known as MDS, Inc. for the development and manufacturing of the Company's Inductively Coupled Plasma Mass Spectrometry product line. The fair value of the acquisition was $67.7 million , including cash consideration of $35.0 million , non-cash consideration of $2.6 million for certain non-exclusive rights to intangible assets the Company owns, and $30.4 million representing the fair value of its fifty percent equity interest in the ICPMS Joint Venture held prior to the acquisition. The Company recognized a pre-tax gain of $25.6 million from the re-measurement to fair value of its previously held equity interest in the ICPMS Joint Venture.

Note 6:
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.
 

77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The tabular reconciliation of the total amounts of unrecognized tax benefits is as follows for the fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Unrecognized tax benefits, beginning of period
$
51,740

 
$
39,226

 
$
39,431

Gross increases—tax positions in prior period
10,653

 
2,753

 
13,314

Gross decreases—tax positions in prior period
(4,665
)
 
(4,729
)
 
(11,190
)
Gross increases—current-period tax positions
3,343

 
2,451

 
2,503

Gross increases—related to acquisitions
—

 
14,412

 
80

Settlements
(2,822
)
 
(430
)
 
(2,035
)
Lapse of statute of limitations
(595
)
 
(2,224
)
 
(2,054
)
Foreign currency translation adjustments
456

 
281

 
(823
)
Unrecognized tax benefits, end of period
$
58,110

 
$
51,740

 
$
39,226

 
The Company classifies interest and penalties as a component of income tax expense. At December 30, 2012 , the Company had accrued interest and penalties of approximately $7.9 million and $4.0 million , respectively. During fiscal year 2012 , the Company recognized a charge of approximately $1.1 million for interest and a benefit of $2.2 million for penalties in its total tax provision. During fiscal year 2011 , the Company recognized interest and penalties of approximately $0.5 million and zero , respectively, in its total tax provision. During fiscal year 2010, the Company recognized interest and penalties of approximately $0.8 million and $0.9 million , respectively, in its total tax provision. At December 30, 2012 , the Company had gross tax effected unrecognized tax benefits of $58.1 million , of which $51.1 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 $13.2 million of its uncertain tax positions at December 30, 2012 , including accrued interest and penalties, and net of tax benefits, may be recognized within the next year as a result of an aggregate $8.4 million lapse in the statute of limitations and settlements of $4.8 million . Tax years after 2005 remain open to examination by various tax jurisdictions in which the Company has significant business operations, such as Singapore, China, Finland, Germany, Netherlands, the United Kingdom, Italy and the United States. The tax years under examination vary by jurisdiction.
 
The components of (loss) income from continuing operations before income taxes were as follows for the fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
U.S.
$
(118,546
)
 
$
(145,298
)
 
$
(22,014
)
Non-U.S.
169,133

 
209,652

 
187,965

Total
$
50,587

 
$
64,354

 
$
165,951

 
On a U. S. income tax basis, the Company has reported significant taxable income over the three year period ended December 30, 2012 . The Company has utilized tax attributes to minimize cash taxes paid on that taxable income.
 

78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The components of the provision for (benefit from) income taxes for continuing operations were as follows:
 
 
Current
 
Deferred Expense
(Benefit)
 
Total
 
(In thousands)
Fiscal year ended December 30, 2012
 
 
 
 
 
Federal
$
(5,234
)
 
$
(34,920
)
 
$
(40,154
)
State
2,617

 
(2,794
)
 
(177
)
Non-U.S.
50,314

 
(27,837
)
 
22,477

Total
$
47,697

 
$
(65,551
)
 
$
(17,854
)
Fiscal year ended January 1, 2012
 
 
 
 
 
Federal
$
18,309

 
$
8,615

 
$
26,924

State
3,397

 
(4,583
)
 
(1,186
)
Non-U.S.
41,765

 
(4,321
)
 
37,444

Total
$
63,471

 
$
(289
)
 
$
63,182

Fiscal year ended January 2, 2011
 
 
 
 
 
Federal
$
6,499

 
$
(15,916
)
 
$
(9,417
)
State
6,772

 
(2,988
)
 
3,784

Non-U.S.
38,267

 
(5,591
)
 
32,676

Total
$
51,538

 
$
(24,495
)
 
$
27,043


The total provision for income taxes included in the consolidated financial statements is as follows for the fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Continuing operations
$
(17,854
)
 
$
63,182

 
$
27,043

Discontinued operations
906

 
(4,484
)
 
96,593

Total
$
(16,948
)
 
$
58,698

 
$
123,636

 
A reconciliation of income tax expense at the U.S. federal statutory income tax rate to the recorded tax provision (benefit) is as follows for the fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Tax at statutory rate
$
17,708

 
$
22,526

 
$
58,086

Non-U.S. rate differential, net
(26,652
)
 
(37,797
)
 
(23,873
)
U.S. taxation of multinational operations
1,727

 
1,487

 
4,032

State income taxes, net
3,265

 
(5,536
)
 
4,745

Prior year tax matters
3,389

 
(9,079
)
 
(11,891
)
Estimated taxes on repatriation
—

 
79,662

 
—

Federal tax credits
(1,657
)
 
(1,509
)
 
(3,867
)
Change in valuation allowance
(14,446
)
 
11,364

 
(3,529
)
Other, net
(1,188
)
 
2,064

 
3,340

Total
$
(17,854
)
 
$
63,182

 
$
27,043

 

79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The tax effects of temporary differences and attributes that gave rise to deferred income tax assets and liabilities as of December 30, 2012 and January 1, 2012 were as follows:
 
 
December 30,
2012
 
January 1,
2012
 
(In thousands)
Deferred tax assets:
 
 
 
Inventory
$
9,893

 
$
8,519

Reserves and accruals
19,845

 
22,522

Accrued compensation
15,803

 
25,787

Net operating loss and credit carryforwards
165,274

 
194,687

Accrued pension
34,016

 
51,580

Restructuring reserve
7,951

 
6,505

Deferred revenue
42,054

 
27,541

All other, net
1,432

 
2,563

Total deferred tax assets
296,268

 
339,704

Deferred tax liabilities:
 
 
 
Postretirement health benefits
(3,472
)
 
(2,955
)
Depreciation and amortization
(191,075
)
 
(244,547
)
Repatriation accrual
(31,447
)
 
(70,374
)
Total deferred tax liabilities
(225,994
)
 
(317,876
)
Valuation allowance
(67,814
)
 
(82,260
)
Net deferred tax assets (liabilities)
$
2,460

 
$
(60,432
)

At December 30, 2012 , the Company had state net operating loss carryforwards of approximately $281.0 million , foreign net operating loss carryforwards of $187.6 million , state tax credit carryforwards of $11.9 million , general business tax credit carryforwards of $27.5 million , and foreign tax credit carryforwards of $13.5 million . These are subject to expiration in years ranging from 2013 to 2031 , and without expiration for certain foreign net operating loss carryforwards and certain state credit carryforwards. At December 30, 2012 , the Company also had U.S. federal net operating loss carryforwards of approximately $181.3 million and federal credit carryforwards of approximately $12.6 million as a result of acquisitions made during fiscal years 2007 through 2011. The Company acquired estimated utilizable U.S. federal loss carryforwards of $223.4 million as a result of the Caliper acquisition during fiscal year 2011, of which $150.5 million remain at December 30, 2012 . The utilization of these losses and credits is subject to annual limitations based on Section 382 of the Internal Revenue Code of 1986, as amended. These federal losses and credits will expire in fiscal years 2013 through 2030 .
 
Valuation allowances take into consideration limitations imposed upon the use of the tax attributes and reduce the value of such items to the likely net realizable amount. Valuation allowances have been provided on state net operating loss and state tax credit carryforwards and on certain foreign tax attributes that the Company has determined are not more likely than not to be realized. Approximately $10.4 million of valuation allowances were provided on acquired tax attributes in connection with business combinations occurring in fiscal year 2011 .
 
Current deferred tax assets of $34.9 million and $38.0 million were included in other current assets at December 30, 2012 and January 1, 2012 , respectively. Long-term deferred tax liabilities of $32.4 million and $98.5 million were included in other long-term liabilities at December 30, 2012 and January 1, 2012 , respectively.
 
The components of net deferred tax assets (liabilities) as of December 30, 2012 and January 1, 2012 were as follows:
 
 
December 30,
2012
 
January 1,
2012
 
(In thousands)
U.S.
$
(10,919
)
 
$
(48,631
)
Non-U.S.
13,379

 
(11,801
)
Total
$
2,460

 
$
(60,432
)
 

80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


As a result of the sale of the IDS and Photoflash businesses in fiscal year 2010, the Company concluded that the remaining operations within those foreign subsidiaries previously containing IDS and Photoflash operations did not require the same level of capital as previously required, and therefore the Company planned to repatriate approximately $250.0 million of previously unremitted earnings and provided for the estimated taxes on the repatriation of those earnings. The impact of this tax provision in fiscal year 2010 was an increase to the Company’s tax provision of $65.8 million in discontinued operations. The Company utilized existing tax attributes to minimize the cash taxes paid on the repatriation. As of January 1, 2012, the Company had completed the repatriation of the previously unremitted earnings of the IDS and Photoflash businesses, and reduced its estimated tax liability associated with the repatriation by approximately $6.7 million . This change in estimate was recorded as a credit to discontinued operations during fiscal year 2011.
 
As a result of the Caliper acquisition, the Company concluded in fiscal year 2011 that certain foreign operations did not require the same level of capital as previously expected, and therefore the Company planned to repatriate approximately $350.0 million of previously unremitted earnings and has provided for the estimated taxes on the repatriation of those earnings. As a result of the planned repatriation, the Company recorded an increase to the Company’s tax provision of $79.7 million in continuing operations in fiscal year 2011. The Company expects to utilize tax attributes, primarily those acquired in the Caliper acquisition, to minimize the cash taxes paid on the repatriation. As of December 30, 2012 , the Company had remitted $229.2 million of the $350.0 million planned repatriation.

Taxes have not been provided for unremitted earnings that the Company continues to consider indefinitely reinvested, the determination of which is based on its future operational and capital requirements. The Company continues to maintain its indefinite reinvestment assertion with regards to the remaining unremitted earnings of its foreign subsidiaries, and therefore does not accrue U.S. tax for the repatriation of its remaining unremitted foreign earnings. As of December 30, 2012 , the amount of foreign earnings that the Company has the intent and ability to keep invested outside the U.S. indefinitely and for which no U.S. tax cost has been provided was approximately $472.0 million . It is not practical to calculate the unrecognized deferred tax liability on those earnings.

Note 7:
Earnings Per Share
 
Basic earnings per share was computed by dividing net income by the weighted-average number of common shares outstanding during the period less restricted unvested shares. Diluted earnings per share was computed by dividing net income by the weighted-average number of common shares outstanding plus all potentially dilutive common stock equivalents, primarily shares issuable upon the exercise of stock options using the treasury stock method. The following table reconciles the number of shares utilized in the earnings per share calculations for the fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Number of common shares—basic
113,728

 
112,976

 
117,109

Effect of dilutive securities:
 
 
 
 
 
Stock options
847

 
739

 
725

Restricted stock awards
285

 
149

 
148

Number of common shares—diluted
114,860

 
113,864

 
117,982

Number of potentially dilutive securities excluded from calculation due to antidilutive impact
1,288

 
2,281

 
4,583

 
Antidilutive securities include outstanding stock options with exercise prices and average unrecognized compensation cost in excess of the average fair market value of common stock for the related period. Antidilutive options were excluded from the calculation of diluted net income per share and could become dilutive in the future.
 
 Note 8:
Accounts Receivable, Net

Accounts receivable were net of reserves for doubtful accounts of $23.4 million and $23.6 million as of December 30, 2012 and January 1, 2012 , respectively.


81


Note 9:
Inventories, Net

Inventories as of December 30, 2012 and January 1, 2012 consisted of the following:
 
 
December 30,
2012
 
January 1,
2012
 
(In thousands)
Raw materials
$
74,924

 
$
72,913

Work in progress
12,768

 
14,656

Finished goods
159,996

 
153,194

Total inventories, net
$
247,688

 
$
240,763

 
Note 10:
Property, Plant and Equipment, Net
 
Property, plant and equipment, at cost, as of December 30, 2012 and January 1, 2012 , consisted of the following:
 
 
December 30,
2012
 
January 1,
2012
 
(In thousands)
Land
$
8,050

 
$
8,027

Building and leasehold improvements
180,821

 
147,181

Machinery and equipment
324,608

 
296,745

Total property, plant and equipment
513,479

 
451,953

Accumulated depreciation
(302,963
)
 
(277,386
)
Total property, plant and equipment, net
$
210,516

 
$
174,567

 
Depreciation expense on property, plant and equipment for the fiscal years ended December 30, 2012 ,  January 1, 2012 and January 2, 2011 was $35.6 million , $30.9 million and $28.4 million , respectively.
 
Note 11:
Marketable Securities and Investments
 
Investments as of December 30, 2012 and January 1, 2012 consisted of the following:
 
 
December 30,
2012
 
January 1,
2012
 
(In thousands)
Marketable securities
$
1,149

 
$
1,105

 
Marketable securities include equity and fixed-income securities held to meet obligations associated with the Company’s supplemental executive retirement plan and other deferred compensation plans. The Company has, accordingly, classified these securities as long-term.
 
The net unrealized holding gain and loss on marketable securities, net of deferred income taxes, reported as a component of other comprehensive income in stockholders’ equity, was a $0.03 million gain in fiscal year 2012 and $0.1 million loss in fiscal year 2011 . The proceeds from the sales of securities and the related gains and losses are not material for any period presented.

82


Marketable securities classified as available for sale as of December 30, 2012 and January 1, 2012 consisted of the following:
 
 
Market
 
Gross Unrealized Holding
Value
 
Cost
 
Gains
 
(Losses)
 
 
(In thousands)
 
 
December 30, 2012
 
 
 
 
 
 
 
Equity securities
$
657

 
$
804

 
$
—

 
$
(147
)
Fixed-income securities
294

 
294

 
—

 
—

Other
198

 
261

 
—

 
(63
)
 
$
1,149

 
$
1,359

 
$
—

 
$
(210
)
January 1, 2012
 
 
 
 
 
 
 
Equity securities
$
646

 
$
843

 
$
—

 
$
(197
)
Fixed-income securities
289

 
289

 
—

 
—

Other
170

 
231

 
—

 
(61
)
 
$
1,105

 
$
1,363

 
$
—

 
$
(258
)
 
Note 12:
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 2, 2012 , its annual impairment date for fiscal year 2012 , and concluded based on the first step of the process that there was no goodwill impairment. The fair values of each of the Company's reporting units were substantially in excess of their carrying values.
 
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 rate and working capital changes. Cash flow forecasts are based on approved business unit operating plans for the early years’ cash flows and historical relationships in later years. The income approach is sensitive to changes in long-term terminal growth rates and the discount rates. The long-term terminal growth rates are consistent with the Company’s historical long-term terminal growth rates, as the current economic trends are not expected to affect the long-term terminal growth rates of the Company. The long-term terminal growth rates for the Company’s reporting units ranged from 4.0% to 6.0% for the fiscal year 2012 impairment analysis. The range for the discount rates for the reporting units was 10.5% to 12.0% . 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.
 
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 currently evaluates the remaining useful life 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 2, 2012 , 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.
 

83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


As part of integrating the Company's recent acquisitions, in the fourth quarter of fiscal year 2012, the Company decided that prospectively it would primarily focus on the PerkinElmer trade name. Accordingly, the Company undertook a review of certain of its trade names within its portfolio as part of a realignment of its marketing strategy. The process resulted in the Company determining that the lives of certain trade names that it intends to phase out should be shortened, and in certain cases non-amortizing trade names were determined to no longer be indefinite-lived. Accordingly, the Company tested the recoverability of these identified indefinite-lived and definite-lived intangibles and concluded that the fair values of certain trade name intangible assets were less than the carrying amounts of those assets. For non-amortizing trade names the Company compared the fair values, which was determined using a relief from royalty method, to the carrying values, considering the revised useful lives. For amortizing trade names, the Company first determined if the undiscounted cash flows associated with the intangibles exceeded the carrying values. If the undiscounted cash flows did not exceed the carrying values, the Company determined the fair values of the trade names using a relief from royalty method, considering the revised useful lives. The remaining adjusted fair values of $6.1 million are being amortized over the period of time until the trade names are expected to be phased out, having weighted average remaining useful lives of 3.0 years.
 
As a result, during the fourth quarter of fiscal year 2012 the Company recorded an intangible asset impairment charge of $74.2 million which was equal to the excess of the carrying amounts of the intangible assets over the fair value of such assets. The Company recognized $54.3 million pre-tax impairment charges in the Human Health segment and also recognized $19.9 million pre-tax impairment charges in the Environmental Health segment. The Company recorded a charge of $3.0 million for the impairment of intangible assets during fiscal year 2011 within the Human Health segment for the full impairment of license agreements, that the Company no longer intends to use. There were no impairment charges during fiscal year 2010 . These non-cash impairments of intangible assets have been recorded as a separate component of operating expenses.
 
The changes in the carrying amount of goodwill for fiscal years 2012 and 2011 are as follows, (the January 1, 2012 balances have been retrospectively adjusted to reflect measurement period adjustments to the Caliper purchase price allocation, see Note 2):
 
 
Human
Health
 
Environmental
Health
 
Consolidated
 
(In thousands)
Balance at January 2, 2011
$
974,940

 
$
529,875

 
$
1,504,815

Foreign currency translation
1,776

 
(2,032
)
 
(256
)
Acquisitions, earnouts and other
414,464

 
175,212

 
589,676

Adjusted balance at January 1, 2012
1,391,180

 
703,055

 
2,094,235

Foreign currency translation
5,894

 
2,977

 
8,871

Acquisitions, earnouts and other
19,682

 
—

 
19,682

Balance at December 30, 2012
$
1,416,756

 
$
706,032

 
$
2,122,788

 

84
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Identifiable intangible asset balances at December 30, 2012 by category and by business segment were as follows:
 
 
Human
Health
 
Environmental
Health
 
Consolidated
 
(In thousands)
Patents
$
91,948

 
$
16,021

 
$
107,969

Less: Accumulated amortization
(74,831
)
 
(15,123
)
 
(89,954
)
Net patents
17,117

 
898

 
18,015

Trade names and trademarks
34,581

 
3,113

 
37,694

Less: Accumulated amortization
(13,166
)
 
(720
)
 
(13,886
)
Net trade names and trademarks
21,415

 
2,393

 
23,808

Licenses
71,274

 
9,333

 
80,607

Less: Accumulated amortization
(41,493
)
 
(5,875
)
 
(47,368
)
Net licenses
29,781

 
3,458

 
33,239

Core technology
244,042

 
163,503

 
407,545

Less: Accumulated amortization
(139,558
)
 
(108,952
)
 
(248,510
)
Net core technology
104,484

 
54,551

 
159,035

Customer relationships
234,243

 
93,394

 
327,637

Less: Accumulated amortization
(90,486
)
 
(17,898
)
 
(108,384
)
Net customer relationships
143,757

 
75,496

 
219,253

IPR&D
2,763

 
4,700

 
7,463

Less: Accumulated amortization
(229
)
 
(1,267
)
 
(1,496
)
Net IPR&D
2,534

 
3,433

 
5,967

Net amortizable intangible assets
319,088

 
140,229

 
459,317

Non-amortizable intangible assets:
 
 
 
 
 
Trade names and trademarks
—

 
70,584

 
70,584

Total
$
319,088

 
$
210,813

 
$
529,901



85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Identifiable intangible asset balances at January 1, 2012 by category and business segment were as follows:
 
 
Human
Health
 
Environmental
Health
 
Consolidated
 
(In thousands)
Patents
$
91,415

 
$
16,022

 
$
107,437

Less: Accumulated amortization
(70,204
)
 
(14,984
)
 
(85,188
)
Net patents
21,211

 
1,038

 
22,249

Trade names and trademarks
32,203

 
3,011

 
35,214

Less: Accumulated amortization
(10,627
)
 
(459
)
 
(11,086
)
Net trade names and trademarks
21,576

 
2,552

 
24,128

Licenses
71,373

 
8,500

 
79,873

Less: Accumulated amortization
(33,113
)
 
(4,226
)
 
(37,339
)
Net licenses
38,260

 
4,274

 
42,534

Core technology
224,583

 
160,529

 
385,112

Less: Accumulated amortization
(116,159
)
 
(96,675
)
 
(212,834
)
Net core technology
108,424

 
63,854

 
172,278

Customer relationships
236,343

 
80,439

 
316,782

Less: Accumulated amortization
(61,921
)
 
(7,789
)
 
(69,710
)
Net customer relationships
174,422

 
72,650

 
247,072

IPR&D
2,431

 
4,700

 
7,131

Less: Accumulated amortization
(28
)
 
(791
)
 
(819
)
Net IPR&D
2,403

 
3,909

 
6,312

Net amortizable intangible assets
366,296

 
148,277

 
514,573

Non-amortizable intangible assets:
 
 
 
 
 
Trade names and trademarks
57,338

 
89,696

 
147,034

Total
$
423,634

 
$
237,973

 
$
661,607

 
Total amortization expense related to definite-lived intangible assets was $91.2 million in fiscal year 2012 , $80.0 million in fiscal year 2011 and $60.7 million in fiscal year 2010 . Estimated amortization expense related to definite-lived intangible assets for each of the next five years is $89.1 million in fiscal year 2013 , $78.8 million in fiscal year 2014 , $65.4 million in fiscal year 2015 , $56.5 million in fiscal year 2016 , and $45.4 million in fiscal year 2017 .

During fiscal year 2012 , the Company entered into a strategic agreement under which it acquired certain intangible assets and received a license to certain core technology for an analytics and data discovery platform, as well as the exclusive right to distribute the platform in certain scientific research and development markets. During fiscal year 2012 , the Company paid  $6.8 million  for net intangible assets and  $25.0 million  for prepaid royalties, and expects to pay an additional  $13.2 million  in prepaid royalties within the next year. Royalties are expected to be expensed as revenue is recognized. These intangible assets are being amortized over their estimated useful lives. The Company has reported the amortization of these intangible assets within the results of the Company's Human Health segment from the execution date.

Note 13:
Debt
 
Senior Unsecured Revolving Credit Facility.  On December 16, 2011, the Company entered into an amended and restated senior unsecured revolving credit facility which provides for $700.0 million of revolving loans and has an initial maturity of December 16, 2016 . As of December 30, 2012 , undrawn letters of credit in the aggregate amount of $12.3 million were treated as issued and outstanding under the senior unsecured revolving credit facility. As of December 30, 2012 , the Company had $429.7 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 at the time of borrowing plus a margin, or the base rate from time to time. 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 Bank of America, N.A. as its "prime rate," (ii) the Federal Funds rate plus 50 basis points or (iii) one-month Libor plus 1.00%. The Eurocurrency margin as of December 30, 2012 was 130 basis points. The weighted average Eurocurrency interest rate as of December 30, 2012 was 0.21% , resulting in a weighted average effective Eurocurrency rate, including the margin, of 1.51% ,

86
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


which is the interest applicable to borrowings outstanding under the Eurocurrency rate as of December 30, 2012 . At December 30, 2012 and January 1, 2012 , the Company had $258.0 million and $298.0 million , respectively of borrowings in U.S. Dollars outstanding under the senior unsecured revolving credit facility with interest based primarily on the above described Eurocurrency rate. The credit agreement for the facility contains affirmative, negative and financial covenants and events of default customary for financings of this type and similar to those contained in the Company's credit agreement for its previous facility. The financial covenants in the Company's amended and restated 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.
 
6% Senior Unsecured Notes due 2015.  On May 30, 2008, the Company issued $150.0 million aggregate principal amount of senior unsecured notes due 2015 (the “2015 Notes”) in a private placement and received $150.0 million of proceeds from the issuance. The 2015 Notes mature in May 2015 and bear interest at an annual rate of 6% . Interest on the 2015 Notes is payable semi-annually on May 30th and November 30th each year. The Company may redeem some or all of the 2015 Notes at any time, at its option, at a make-whole redemption price plus accrued and unpaid interest. The indenture governing the 2015 Notes includes financial covenants of debt-to-capital ratios and a contingent multiple of total debt to earnings ratio, applicable only if the Company's credit rating is downgraded below investment grade.

5% Senior Unsecured Notes due 2021.  On October 25, 2011, the Company issued $500.0 million aggregate principal amount of 2021 Notes in a registered public offering and received approximately $496.9 million of 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 . 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 September 2012, the Company entered into agreements with the lessors of 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, which resulted in the Company being considered the owner of the buildings during the construction period. At the end of the construction period, the Company will not be reimbursed by the lessors for all of the construction costs. The Company is therefore deemed to have continuing involvement and the leases will 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. In addition, the Company expects to capitalize additional construction costs, which are not expected to exceed $15.0 million , and will be partially funded by the lessors to complete the additions to the buildings. During fiscal year 2012 , the Company recorded $5.5 million of capital improvements to these buildings, which have been funded by the lessor. 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.
 

87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The following table summarizes the maturities of the Company’s indebtedness as of December 30, 2012 :
 
 
Sr. Unsecured
Revolving
Credit Facility
Maturing 2016
 
6.0% Sr. Notes
Maturing 2015
 
5.0% Sr. Notes
Maturing 2021
 
Financing Lease Obligations
 
Other
Debt
Facilities
 
Total
 
(In thousands)
2013
$
—

 
$
—

 
$
—

 
$
1,667

 
$
105

 
$
1,772

2014
—

 
—

 
—

 
2,474

 
700

 
3,174

2015
—

 
150,000

 
—

 
2,482

 
—

 
152,482

2016
258,000

 
—

 
—

 
2,490

 
—

 
260,490

2017
—

 
—

 
—

 
2,498

 
—

 
2,498

Through 2023
—

 
—

 
500,000

 
22,997

 
—

 
522,997

Total before unamortized discount
258,000

 
150,000

 
500,000

 
34,608

 
805

 
943,413

Unamortized discount
—

 
—

 
(2,817
)
 
—

 
—

 
(2,817
)
Total
$
258,000

 
$
150,000

 
$
497,183

 
$
34,608

 
$
805

 
$
940,596


Note 14:
Accrued Expenses and Other Current Liabilities
 
Accrued expenses and other current liabilities as of December 30, 2012 and January 1, 2012 consisted of the following:
 
 
December 30,
2012
 
January 1,
2012
 
(In thousands)
Payroll and incentives
$
55,342

 
$
59,862

Employee benefits
42,485

 
39,618

Deferred revenue
154,247

 
138,470

Federal, non-U.S. and state income taxes
16,091

 
36,538

Other accrued operating expenses
119,861

 
135,654

Total accrued expenses and other current liabilities
$
388,026

 
$
410,142

 
Note 15:
Employee Benefit Plans
 
Savings Plan:     The Company has a 401(k) Savings Plan for the benefit of all qualified U.S. employees, with such employees receiving matching contributions in the amount equal to 100.0% of the first 5.0% of eligible compensation up to applicable Internal Revenue Service limits. Such matching contributions have been in effect since February 1, 2011 for all employees except former employees of Caliper, who received matching contributions of 50.0% of the first 5.0% of eligible compensation up to applicable Internal Revenue Service limits until December 31, 2012. Savings plan expense was $12.3 million in fiscal year 2012 and $10.6 million in each of the fiscal years 2011 and 2010 .  

Pension Plans:     The Company has a defined benefit pension plan covering some U.S. employees and non-U.S. pension plans for some non-U.S. employees. The principal U.S. defined benefit pension plan was closed to new hires effective January 31, 2001, and benefits for those employed by the Company’s former Life Sciences businesses were frozen as of that date. Plan benefits were frozen as of March 2003 for those employed by the Company’s former Analytical Instruments business and corporate employees. Plan benefits were frozen as of January 31, 2011 for all employees that were still actively accruing in the plan. The plans provide benefits that are based on an employee’s years of service and compensation near retirement.
 

88
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Net periodic pension cost for U.S. and non-U.S. plans included the following components for fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Service cost
$
3,852

 
$
3,880

 
$
4,778

Interest cost
23,164

 
25,169

 
24,894

Expected return on plan assets
(20,768
)
 
(22,534
)
 
(20,451
)
Curtailment gain
—

 
—

 
(6,489
)
Actuarial loss
28,355

 
64,005

 
756

Amortization of prior service cost
(242
)
 
(221
)
 
(187
)
Net periodic pension cost
$
34,361

 
$
70,299

 
$
3,301



89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The following table sets forth the changes in the funded status of the principal U.S. pension plan and the principal non-U.S. pension plans and the amounts recognized in the Company’s consolidated balance sheets as of December 30, 2012 and January 1, 2012 .
 
 
December 30, 2012
 
January 1, 2012
Non-U.S.
 
U.S.
 
Non-U.S.
 
U.S.
(In thousands)
Actuarial present value of benefit obligations:
 
 
 
 
 
 
 
Accumulated benefit obligations
$
271,153

 
$
301,770

 
$
221,096

 
$
297,001

Change in benefit obligations:
 
 
 
 
 
 
 
Projected benefit obligations at beginning of year
$
231,325

 
$
297,001

 
$
226,117

 
$
249,591

Service cost
2,502

 
1,350

 
2,620

 
1,260

Interest cost
11,235

 
11,929

 
12,136

 
13,033

Benefits paid and plan expenses
(10,625
)
 
(17,568
)
 
(12,146
)
 
(16,916
)
Participants’ contributions
432

 
—

 
478

 
—

Actuarial loss
38,541

 
9,058

 
99

 
50,033

Effect of exchange rate changes
5,297

 
—

 
2,021

 
—

Projected benefit obligations at end of year
$
278,707

 
$
301,770

 
$
231,325

 
$
297,001

Change in plan assets:
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
97,836

 
$
195,022

 
$
95,660

 
$
203,825

Actual return on plan assets
12,710

 
27,301

 
547

 
8,113

Benefits paid and plan expenses
(10,625
)
 
(17,568
)
 
(12,146
)
 
(16,916
)
Employer’s contributions
10,882

 
17,000

 
11,549

 
—

Participants’ contributions
432

 
—

 
478

 
—

Effect of exchange rate changes
3,280

 
—

 
1,748

 
—

Fair value of plan assets at end of year
114,515

 
221,755

 
97,836

 
195,022

Net amount recognized in the consolidated balance sheets
$
164,192

 
$
80,015

 
$
133,489

 
$
101,979

Net amounts recognized in the consolidated balance sheets consist of:
 
 
 
 
 
 
 
Current liabilities
$
7,398

 
$
—

 
$
6,587

 
$
—

Noncurrent liabilities
156,794

 
80,015

 
126,902

 
$
101,979

Net amounts recognized in the consolidated balance sheets
$
164,192

 
$
80,015

 
$
133,489

 
$
101,979

Net amounts recognized in accumulated other comprehensive income consist of:
 
 
 
 
 
 
 
Prior service cost
$
(2,048
)
 
$
—

 
$
(2,272
)
 
$
—

Net amounts recognized in accumulated other comprehensive income
$
(2,048
)
 
$
—

 
$
(2,272
)
 
$
—

Actuarial assumptions as of the year-end measurement date:
 
 
 
 
 
 
 
Discount rate
3.62
%
 
3.92
%
 
4.91
%
 
4.10
%
Rate of compensation increase
2.88
%
 
None

 
3.22
%
 
3.50
%


90
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


 
December 30, 2012
 
January 1, 2012
 
January 2, 2011
 
Non-U.S.
 
U.S.
 
Non-U.S.
 
U.S.
 
Non-U.S.
 
U.S.
Actuarial assumptions used to determine net periodic pension cost during the year:
 
 
 
 
 
 
 
 
 
 
 
Discount rate
4.91
%
 
4.10
%
 
5.14
%
 
5.30
%
 
5.29
%
 
5.50
%
Rate of compensation increase
3.22
%
 
3.50
%
 
3.42
%
 
3.50
%
 
3.39
%
 
3.50
%
Expected rate of return on assets
5.40
%
 
7.75
%
 
6.70
%
 
8.10
%
 
7.20
%
 
8.50
%
 
Assets of the defined benefit pension plans are primarily equity and debt securities. Asset allocations as of December 30, 2012 and January 1, 2012 , and target asset allocations for the fiscal year 2013 are as follows:
 
 
Target Allocation
 
Percentage of Plan Assets at
 
December 29, 2013
 
December 30, 2012
 
January 1, 2012
Asset Category
Non-U.S.
 
U.S.
 
Non-U.S.
 
U.S.
 
Non-U.S.
 
U.S.
Equity securities
65-75%

 
50-60%

 
71
%
 
55
%
 
68
%
 
57
%
Debt securities
25-35%

 
40-50%

 
29
%
 
39
%
 
31
%
 
40
%
Other
0
%
 
0-5%

 
0
%
 
6
%
 
1
%
 
3
%
Total
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
The Company maintains target allocation percentages among various asset classes based on investment policies established for the pension plans which are designed to maximize the total rate of return (income and appreciation) after inflation within the limits of prudent risk taking, while providing for adequate near-term liquidity for benefit payments.

The Company’s expected returns on assets assumptions are derived from management’s estimates, as well as other information compiled by management, including studies that utilize customary procedures and techniques. The studies include a review of anticipated future long-term performance of individual asset classes and consideration of the appropriate asset allocation strategy given the anticipated requirements of the plans to determine the average rate of earnings expected on the funds invested to provide for the pension plans benefits. While the study gives appropriate consideration to recent fund performance and historical returns, the assumption is primarily a long-term, prospective rate.
 
The Company's discount rate assumptions are derived from a range of factors, including a yield curve composed of the rates of return on high-quality fixed-income corporate bonds available at the measurement date and the related expected duration for the obligations.

The target allocations for plan assets are listed in the above table. Equity securities primarily include investments in large-cap and mid-cap companies located in the United States and abroad, and equity index funds. Debt securities include corporate bonds of companies from diversified industries, high-yield bonds, and U.S. government securities. Other types of investments include investments in non U.S. government index liked bonds, multi-strategy hedge funds and venture capital funds that follow several different strategies.


91
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The fair values of the Company’s pension plan assets as of December 30, 2012 and January 1, 2012 by asset category, classified in the three levels of inputs described in Note 21 to the consolidated financial statements are as follows:
 
 
Fair Value Measurements at December 30, 2012 Using:
Total Carrying
Value at
December 30, 2012
 
Quoted Prices in
Active Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable 
Inputs
(Level 3)
(In thousands)
Cash
$
13,940

 
$
13,940

 
$
—

 
$
—

Equity Securities:
 
 
 
 
 
 
 
U.S. large-cap
37,674

 
37,674

 
—

 
—

International large-cap value
37,239

 
37,239

 
—

 
—

U.S. small-cap
3,567

 
3,567

 
—

 
—

Emerging markets growth
12,390

 
12,390

 
—

 
—

Equity index funds
80,999

 
—

 
80,999

 
—

Domestic real estate funds
2,235

 
2,235

 
—

 
—

Commodity funds
8,940

 
8,940

 
—

 
—

Fixed income securities:
 
 
 
 
 
 
 
Corporate debt instruments-preferred
565

 
—

 
565

 
—

Corporate and U.S. debt instruments
73,362

 
18,985

 
54,377

 
—

Corporate bonds
22,497

 
—

 
22,497

 
—

High yield bond funds
11,624

 
11,624

 
—

 
—

Other types of investments:
 
 
 
 
 
 
 
Multi-strategy hedge funds
20,262

 
—

 
—

 
20,262

Venture capital funds
7

 
—

 
—

 
7

Private funds
162

 
—

 
—

 
162

Non U.S. government index linked bonds
10,807

 
—

 
10,807

 
—

Total assets measured at fair value
$
336,270

 
$
146,594

 
$
169,245

 
$
20,431

 

92
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


 
Fair Value Measurements at January 1, 2012 Using:
Total Carrying
Value at
January 1, 2012
 
Quoted Prices in
Active Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable 
Inputs
(Level 3)
(In thousands)
Cash
$
6,754

 
$
6,754

 
$
—

 
$
—

Equity Securities:
 
 
 
 
 
 
 
U.S. large-cap
36,651

 
36,651

 
—

 
—

International large-cap value
30,567

 
30,567

 
—

 
—

U.S. small-cap
2,942

 
2,942

 
—

 
—

Emerging markets growth
9,570

 
9,570

 
—

 
—

Equity index funds
66,320

 
—

 
66,320

 
—

Domestic real estate funds
5,120

 
5,120

 
—

 
—

Commodity funds
7,515

 
7,515

 
—

 
—

Fixed income securities:
 
 
 
 
 
 
 
Corporate debt instruments-preferred
371

 
—

 
371

 
—

Corporate and U.S. debt instruments
63,764

 
19,777

 
43,987

 
—

Corporate bonds
20,121

 
—

 
20,121

 
—

High yield bond funds
13,206

 
13,206

 
—

 
—

Other types of investments:
 
 
 
 
 
 
 
Multi-strategy hedge funds
19,285

 
—

 
—

 
19,285

Venture capital funds
7

 
—

 
—

 
7

Non U.S. government index linked bonds
10,665

 
—

 
10,665

 
—

Total assets measured at fair value
$
292,858

 
$
132,102

 
$
141,464

 
$
19,292


Valuation Techniques:     Valuation techniques utilized need to maximize the use of observable inputs and minimize the use of unobservable inputs. There have been no changes in the methodologies utilized at December 30, 2012 compared to January 1, 2012 . The following is a description of the valuation techniques utilized to measure the fair value of the assets shown in the table above.
 
Equity Securities:     Shares of registered investment companies that are publicly traded are categorized as Level 1assets; they are valued at quoted market prices that represent the net asset value of the fund. These instruments have active markets.
 
Equity index funds are mutual funds that are not publicly traded and are comprised primarily of underlying equity securities that are publicly traded on exchanges. Price quotes for the assets held by these funds are readily observable and available. Equity index funds are categorized as Level 2 assets.
 
Fixed Income Securities:     Fixed income mutual funds that are publicly traded are valued at quoted market prices that represent the net asset value of securities held by the fund and are categorized as Level 1 assets.
 
Fixed income index funds that are not publicly traded are stated at net asset value as determined by the issuer of the fund based on the fair value of the underlying investments and are categorized as Level 2 assets.
 
Individual fixed income bonds are categorized as Level 2 assets except where sufficient quoted prices exist in active markets, in which case such securities are categorized as Level 1 assets. These securities are valued using third-party pricing services. These services may use, for example, model-based pricing methods that utilize observable market data as inputs. Broker dealer bids or quotes of securities with similar characteristics may also be used.
 
Other Types of Investments:     Non U.S. government index link bond funds are not publicly traded and are stated at net asset value as determined by the issuer of the fund based on the fair value of the underlying investments. Underlying investments consist of bonds in which payment of income on the principal is related to a specific price index and are categorized as Level 2 assets.
 

93
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Hedge funds and venture capital funds are limited partnerships that are at estimated fair value based on their proportionate share of the partnership fair value. The partnerships invest primarily in readily available marketable securities. The partnerships allocate gains, losses, and expense to the investor based on the ownership percentage as described in the fund agreements. They are categorized as Level 3 assets.
 
The Company's policy is to recognize significant transfers between levels at the actual date of the event.
 
A reconciliation of the beginning and ending Level 3 assets for fiscal years 2012, 2011, and 2010 is as follows:
 
 
Fair Value Measurements Using
Significant Unobservable Inputs
(Level 3):
Common
Collective
Trusts/Private Funds
 
Venture
Capital
Funds
 
Multi-strategy
Hedge
Funds
 
Total
(In thousands)
Balance at January 3, 2010
$
12,099

 
$
87

 
$
—

 
$
12,186

Realized gains (losses)
20

 
(92
)
 
—

 
(72
)
Unrealized gains
—

 
113

 
151

 
264

Purchases
—

 
—

 
19,922

 
19,922

Issuances, Sales and Settlements
(12,119
)
 
(94
)
 
—

 
(12,213
)
Balance at January 2, 2011
—

 
14

 
20,073

 
20,087

Realized losses
—

 
—

 
(84
)
 
(84
)
Unrealized losses
—

 
(7
)
 
(704
)
 
(711
)
Purchases
—

 
—

 
—

 
—

Issuances, Sales and Settlements
—

 
—

 
—

 
—

Balance at January 1, 2012
—

 
7

 
19,285

 
19,292

Realized gains
1,162

 
—

 
—

 
1,162

Unrealized gains
19

 
—

 
977

 
996

Purchases
9,448

 
—

 
—

 
9,448

Issuances, Sales and Settlements
(10,467
)
 
—

 
—

 
(10,467
)
Balance at December 30, 2012
$
162

 
$
7

 
$
20,262

 
$
20,431

 
During the first quarter of fiscal year 2013 , the Company contributed $37.0 million to the U.S. pension plan. With respect to non-U.S. plans, the Company expects to contribute approximately $22.0 million in fiscal year 2013 , of which the Company contributed $10.0 million to one of its foreign plans during the first quarter of fiscal year 2013 .
 
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:
 
 
Non-U.S.
 
U.S.
 
(In thousands)
2013
$
11,585

 
$
16,397

2014
11,796

 
16,553

2015
12,636

 
16,689

2016
12,984

 
16,891

2017
13,221

 
17,048

2018-2021
73,862

 
87,928

 
The Company also sponsors a supplemental executive retirement plan to provide senior management with benefits in excess of normal pension benefits. Effective July 31, 2000, this plan was closed to new entrants. At December 30, 2012 and January 1, 2012 , the projected benefit obligations were $23.2 million and $22.3 million , respectively. Assets with a fair value of $0.2 million , segregated in a trust (which is included in marketable securities and investments on the consolidated balance sheets), were available to meet this obligation as of both December 30, 2012 and January 1, 2012 . Pension expense for this plan was approximately $2.5 million in fiscal year 2012 , $4.9 million in fiscal year 2011 and $2.7 million in fiscal year 2010 .

94
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


 
Postretirement Medical Plans:     The Company provides healthcare benefits for eligible retired U.S. employees under a comprehensive major medical plan or under health maintenance organizations where available. Eligible U.S. employees qualify for retiree health benefits if they retire directly from the Company and have at least ten years of service. Generally, the major medical plan pays stated percentages of covered expenses after a deductible is met and takes into consideration payments by other group coverage and by Medicare. The plan requires retiree contributions under most circumstances and has provisions for cost-sharing charges. Effective January 1, 2000, this plan was closed to new hires. For employees retiring after 1991, the Company has capped its medical premium contribution based on employees’ years of service. The Company funds the amount allowable under a 401(h) provision in the Company’s defined benefit pension plan. Assets of the plan are primarily equity and debt securities and are available only to pay retiree health benefits.
 
Net periodic postretirement medical benefit credit included the following components for the fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Service cost
$
106

 
$
85

 
$
102

Interest cost
144

 
163

 
204

Expected return on plan assets
(877
)
 
(884
)
 
(832
)
Curtailment gain
—

 
—

 
(690
)
Actuarial (gain) loss
(929
)
 
705

 
(653
)
Amortization of prior service cost
—

 
(253
)
 
(315
)
Net periodic postretirement medical benefit credit
$
(1,556
)
 
$
(184
)
 
$
(2,184
)


95
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The following table sets forth the changes in the postretirement medical plan’s funded status and the amounts recognized in the Company’s consolidated balance sheets as of December 30, 2012 and January 1, 2012 .
 
 
December 30,
2012
 
January 1,
2012
 
(In thousands)
Actuarial present value of benefit obligations:
 
 
 
Retirees
$
1,475

 
$
1,618

Active employees eligible to retire
431

 
294

Other active employees
1,913

 
1,447

Accumulated benefit obligations at beginning of year
3,819

 
3,359

Service cost
106

 
85

Interest cost
144

 
163

Benefits paid
(205
)
 
(220
)
Actuarial (gain) loss
(54
)
 
432

Change in accumulated benefit obligations during the year
(9
)
 
460

Retirees
1,331

 
1,475

Active employees eligible to retire
470

 
431

Other active employees
2,009

 
1,913

Accumulated benefit obligations at end of year
3,810

 
3,819

Change in plan assets:
 
 
 
Fair value of plan assets at beginning of year
11,411

 
11,020

Actual return on plan assets
1,547

 
391

Fair value of plan assets at end of year
12,958

 
11,411

Net amounts recognized in the consolidated balance sheets
$
(9,148
)
 
$
(7,592
)
Net amounts recognized in the consolidated balance sheets consist of:
 
 
 
Noncurrent assets
$
(9,148
)
 
$
(7,592
)
Net amounts recognized in the consolidated balance sheets
$
(9,148
)
 
$
(7,592
)
Net amounts recognized in accumulated other comprehensive income consist of:
 
 
 
Prior service cost
$
—

 
$
—

Net amounts recognized in accumulated other comprehensive income
$
—

 
$
—

Actuarial assumptions as of the year-end measurement date:
 
 
 
Discount rate
3.86
%
 
4.00
%
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
Actuarial assumptions used to determine net cost during the year:
 
 
 
 
 
Discount rate
4.00
%
 
5.30
%
 
5.50
%
Expected rate of return on assets
7.75
%
 
8.10
%
 
8.50
%
 
The Company maintains a master trust for plan assets related to the U.S. defined benefit plans and the U.S. postretirement medical plan. Accordingly, investment policies, target asset allocations and actual asset allocations are the same as those disclosed for the U.S. defined benefit plans.
 

96
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The fair values of the Company’s plan assets at December 30, 2012 and January 1, 2012 by asset category, classified in the three levels of inputs described in Note 21, are as follows:
 
 
Fair Value Measurements at December 30, 2012 Using:
Total Carrying
Value at
December 30, 2012
 
Quoted Prices in
Active Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
 Inputs
(Level 3)
(In thousands)
Cash
$
798

 
$
798

 
$
—

 
$
—

Equity Securities:
 
 
 
 
 
 
 
U.S. large-cap
2,202

 
2,202

 
—

 
—

International large-cap value
2,177

 
2,177

 
—

 
—

U.S. small-cap
209

 
209

 
—

 
—

Emerging markets growth
724

 
724

 
—

 
—

Domestic real estate funds
131

 
131

 
—

 
—

Commodity funds
523

 
523

 
—

 
—

Fixed income securities:
 
 
 
 
 
 
 
Corporate debt instruments-preferred
33

 
—

 
33

 
—

Corporate and U.S. debt instruments
4,288

 
1,110

 
3,178

 
—

High yield bond funds
679

 
679

 
—

 
—

Other types of investments:
 
 
 
 
 
 
 
Multi-strategy hedge funds
1,184

 
—

 
—

 
1,184

Private funds
9

 
—

 
—

 
9

Venture capital funds
1

 
—

 
—

 
1

Total assets measured at fair value
$
12,958

 
$
8,553

 
$
3,211

 
$
1,194

 
 
Fair Value Measurements at January 1, 2012 Using:
Total Carrying
Value at
January 1, 2012
 
Quoted Prices in
Active Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
 Inputs
(Level 3)
(In thousands)
Cash
$
349

 
$
349

 
$
—

 
$
—

Equity Securities:
 
 
 
 
 
 
 
U.S large-cap
2,144

 
2,144

 
—

 
—

International large-cap value
1,789

 
1,789

 
—

 
—

U.S. small-cap
172

 
172

 
—

 
—

Emerging markets growth
560

 
560

 
—

 
—

Domestic real estate funds
300

 
300

 
—

 
—

Commodity funds
440

 
440

 
—

 
—

Fixed income securities:
 
 
 
 
 
 
 
Corporate debt instruments-preferred
22

 
—

 
22

 
—

Corporate and U.S. debt instruments
3,732

 
1,158

 
2,574

 
—

High yield bond funds
773

 
773

 
—

 
—

Other types of investments:
 
 
 
 
 
 
 
Multi-strategy hedge funds
1,129

 
—

 
—

 
1,129

Venture capital funds
1

 
—

 
—

 
1

Total assets measured at fair value
$
11,411

 
$
7,685

 
$
2,596

 
$
1,130



97
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Valuation Techniques:     Valuation techniques are the same as those disclosed for the U.S. defined benefit plans above.
 
A reconciliation of the beginning and ending Level 3 assets for fiscal years 2012, 2011, and 2010 is as follows:
 
 
Fair Value Measurements Using
Significant Unobservable Inputs
(Level 3):
Common
Collective
Trusts/Private Funds
 
Venture
Capital
Funds
 
Multi-strategy
Hedge
Funds
 
Total
(In thousands)
Balance at January 3, 2010
$
708

 
$
5

 
$
—

 
$
713

Realized losses
(53
)
 
(5
)
 
—

 
(58
)
Unrealized gains
—

 
6

 
8

 
14

Purchases
—

 
—

 
1,078

 
1,078

Issuances, Sales and Settlements
(655
)
 
(5
)
 
—

 
(660
)
Balance at January 2, 2011
—

 
1

 
1,086

 
1,087

Realized gains
—

 
—

 
84

 
84

Unrealized losses
—

 
—

 
(41
)
 
(41
)
Purchases
—

 
—

 
—

 
—

Issuances, Sales and Settlements
—

 
—

 
—

 
—

Balance at January 1, 2012
—

 
1

 
1,129

 
1,130

Realized gains
68

 
—

 
—

 
68

Unrealized gains
1

 
—

 
55

 
56

Purchases
552

 
—

 
—

 
552

Issuances, Sales and Settlements
(612
)
 
—

 
—

 
(612
)
Balance at December 30, 2012
$
9

 
$
1

 
$
1,184

 
$
1,194

 
The Company does not expect to make any contributions to the postretirement medical plan during fiscal year 2013 .
 
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:
 
Postretirement Medical Plan
 
 
(In thousands)
2013
$
205

2014
211

2015
214

2016
219

2017
225

2018-2022
1,236

 
Deferred Compensation Plans:     During fiscal year 1998, the Company implemented a nonqualified deferred compensation plan that provides benefits payable to officers and certain key employees or their designated beneficiaries at specified future dates, or upon retirement or death. Benefit payments under the plan are funded by contributions from participants, and for certain participants, contributions are funded by the Company. The obligations related to the deferred compensation plan totaled $0.9 million at both December 30, 2012 and January 1, 2012 .
 
Note 16:
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 $6.1 million as of December 30, 2012 , which represents management’s estimate of the total cost of the ultimate remediation of known environmental matters, and does not include any potential liability for related personal injury or property damage claims. This amount is not discounted and

98


does not reflect the recovery of any amounts through insurance or indemnification arrangements. These cost estimates are subject to a number of variables, including the stage of the environmental investigations, the magnitude of the possible contamination, the nature of the potential remedies, possible joint and several liability, the time period over which remediation may occur, and the possible effects of changing laws and regulations. For sites where the Company has been named a PRP, management does not currently anticipate any additional liability to result from the inability of other significant named parties to contribute. The Company expects that the majority of such accrued amounts could be paid out over a period of up to ten years. As assessment and remediation activities progress at each individual site, these liabilities are reviewed and adjusted to reflect additional information as it becomes available. There have been no environmental problems to date that have had, or are expected to have, a material adverse effect on the Company’s consolidated financial statements. While it is possible that a loss exceeding the amounts recorded in the consolidated financial statements may be incurred, the potential exposure is not expected to be materially different from those amounts recorded.
 
Enzo Biochem, Inc. and Enzo Life Sciences, Inc. (collectively, “Enzo”) filed a complaint dated October 23, 2002 in the United States District Court for the Southern District of New York, Civil Action No. 02-8448, seeking injunctive and monetary relief against Amersham plc, Amersham BioSciences, PerkinElmer, Inc., PerkinElmer Life Sciences, Inc., Sigma-Aldrich Corporation, Sigma Chemical Company, Inc., Molecular Probes, Inc., and Orchid BioSciences, Inc. The complaint alleges that the Company breached its 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, separately and together with the other defendants. The Company filed an answer and a counterclaim alleging that Enzo's patents are invalid. In 2007, after the court issued a decision in 2006 regarding the construction of the claims in Enzo's patents that effectively limited the coverage of certain of those claims and, the Company believes, excluded certain of the Company's products from the coverage of Enzo's patents, summary judgment motions were filed by the defendants. The case was assigned to a new district court judge in January 2009 and in March 2009, the new judge denied the pending summary judgment motions without prejudice and ordered a stay of the case until the federal appellate court decided Enzo's appeal of the judgment of the United States District Court for the District of Connecticut in Enzo Biochem vs. Applera Corp. and Tropix, Inc. (the “Connecticut Case”), which involved a number of the same patents and which could materially affect the scope of Enzo's case against the Company. In March 2010, the United States Court of Appeals for the Federal Circuit affirmed-in-part and reversed-in-part the judgment in the Connecticut Case. The district court permitted the Company and the other defendants to jointly file a motion for summary judgment on certain patent and other issues common to all of the defendants. On September 12, 2012, the court granted in part and denied in part the Company's motion for summary judgment of non-infringement. On December 21, 2012, the Company filed a second motion for summary judgment on claims that were not addressed in the first motion. The second motion is pending. The district court has permitted Enzo to take limited discovery directed to the motion with briefing to be concluded in May 2013.
The Company believes it has meritorious defenses to the matter described above, and it is contesting the action vigorously. While this matter is subject to uncertainty, in the opinion of the Company’s management, based on its review of the information available at this time, the resolution of this matter will not have a material adverse effect on the Company’s consolidated financial statements.
 
The Company is also subject to various other 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 other contingencies at December 30, 2012 should not have a material adverse effect on the Company’s consolidated financial statements. However, each of these matters is subject to uncertainties, and it is possible that some of these matters may be resolved unfavorably to the Company.
 
Note 17:
Warranty Reserves

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


99
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


A summary of warranty reserve activity for the fiscal years ended December 30, 2012 ,  January 1, 2012 and January 2, 2011 is as follows:
 
 
(In thousands)
Balance at January 3, 2010
$
8,910

Provision charged to income
13,022

Payments
(13,082
)
Adjustments to previously provided warranties, net
(596
)
Foreign currency translation and acquisitions
(4
)
Balance at January 2, 2011
8,250

Provision charged to income
15,001

Payments
(15,154
)
Adjustments to previously provided warranties, net
926

Foreign currency translation and acquisitions
1,389

Balance at January 1, 2012
10,412

Provision charged to income
17,750

Payments
(18,022
)
Adjustments to previously provided warranties, net
801

Foreign currency translation and acquisitions
62

Balance at December 30, 2012
$
11,003

 
Note 18:
Stock Plans

Stock-Based Compensation:
 
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, as well as shares of the Company’s common stock previously granted under the Amended and Restated 2001 Incentive Plan and the 2005 Incentive Plan that were cancelled or forfeited without the shares being issued, are authorized for stock option grants, restricted stock awards, and stock grants as part of the Company’s compensation programs (the “Plan”).
 
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 consolidated statements of operations for fiscal years 2012, 2011, and 2010 :
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Cost of product and service revenue
$
1,276

 
$
1,139

 
$
882

Research and development expenses
769

 
583

 
518

Selling, general and administrative expenses
18,986

 
13,760

 
11,151

Continuing operations stock-based compensation expense
21,031

 
15,482

 
12,551

Discontinued operations stock-based compensation expense
—

 
—

 
1,214

Total stock-based compensation expense
$
21,031

 
$
15,482

 
$
13,765

 
The total income tax benefit recognized in the consolidated statements of operations for stock-based compensation was $6.8 million in fiscal year 2012 , $5.1 million in fiscal year 2011 and $4.7 million in fiscal year 2010 . Stock-based compensation costs capitalized as part of inventory were $0.3 million as of both December 30, 2012 and January 1, 2012 . The excess tax benefit recognized from stock awards, classified as a financing cash activity, was $1.8 million in fiscal year 2012 , $9.3 million in fiscal year 2011 and $2.4 million in fiscal year 2010 .
 
Stock Options:     The Company has granted options to purchase common shares at prices equal to the market price of the common shares on the date the option is granted. Conditions of vesting are determined at the time of grant. Options are generally exercisable in equal annual installments over a period of three years, and will generally expire seven years after the

100
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


date of grant. Options replaced in association with business combination transactions are issued with the same terms of the respective plans under which they were originally issued.
 
The fair value of each option grant is estimated using the Black-Scholes option pricing model. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility was calculated primarily based on the historical volatility of the Company’s stock. The average expected life was based on the contractual term of the option and historic exercise experience. The risk-free interest rate is based on United States Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. Forfeitures are estimated based on voluntary termination behavior, as well as an analysis of actual option forfeitures. The Company’s weighted-average assumptions used in the Black-Scholes option pricing model were as follows for the fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
Risk-free interest rate
0.6
%
 
1.9
%
 
1.8
%
Expected dividend yield
1.2
%
 
1.1
%
 
1.4
%
Expected lives
4 years

 
4 years

 
4 years

Expected stock volatility
38.7
%
 
38.1
%
 
37.5
%

The following table summarizes stock option activity for the three fiscal years ended December 30, 2012 :
 
 
December 30, 2012
 
January 1, 2012
 
January 2, 2011
 
Number
of
Shares
 
Weighted-
Average
Price
 
Number
of
Shares
 
Weighted-
Average
Price
 
Number
of
Shares
 
Weighted-
Average
Price
 
(Shares in thousands)
Outstanding at beginning of year
5,346

 
$
20.57

 
6,983

 
$
21.86

 
8,415

 
$
21.27

Granted
756

 
26.28

 
847

 
24.20

 
784

 
21.16

Exercised
(1,611
)
 
20.16

 
(1,138
)
 
20.86

 
(1,543
)
 
18.82

Canceled
(210
)
 
22.34

 
(1,237
)
 
30.29

 
(267
)
 
25.19

Forfeited
(15
)
 
21.98

 
(109
)
 
18.27

 
(406
)
 
17.67

Outstanding at end of year
4,266

 
$
21.64

 
5,346

 
$
20.57

 
6,983

 
$
21.86

Exercisable at end of year
2,677

 
$
20.00

 
3,549

 
$
20.74

 
4,787

 
$
23.78

 
The aggregate intrinsic value for stock options outstanding at December 30, 2012 was $38.4 million with a weighted-average remaining contractual term of 3.8 years. The aggregate intrinsic value for stock options exercisable at December 30, 2012 was $28.5 million with a weighted-average remaining contractual term of 2.7 years. At December 30, 2012 , there were 4.1 million stock options that were vested, and expected to vest in the future, with an aggregate intrinsic value of $37.1 million and a weighted-average remaining contractual term of 3.8 years.
 
The weighted-average per-share grant-date fair value of options granted during fiscal years 2012, 2011, and 2010 was $7.36 , $7.03 , and $5.99 , respectively. The total intrinsic value of options exercised during fiscal years 2012, 2011, and 2010 was $13.1 million , $6.9 million , and $6.1 million , respectively. Cash received from option exercises for fiscal years 2012, 2011, and 2010 was $32.5 million , $23.7 million , and $29.0 million , respectively. The total compensation expense recognized related to the Company’s outstanding options was $5.1 million in fiscal year 2012 , $4.5 million in fiscal year 2011 and $6.6 million in fiscal year 2010 .
 
There was $6.7 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested stock options granted as of December 30, 2012 . This cost is expected to be recognized over a weighted-average period of 1.8 years, and will be adjusted for any future changes in estimated forfeitures.
 
Restricted Stock Awards:     The Company has awarded shares of restricted stock and restricted stock units to certain employees at no cost to them, which cannot be sold, assigned, transferred or pledged during the restriction period. The restricted stock and restricted stock units vest through the passage of time, assuming continued employment. The fair value of the award at the time of the grant is expensed on a straight line basis primarily in selling, general and administrative expenses over the vesting period, which is generally three years. These awards were granted under the Company’s 2009 Plan, 2005

101
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Incentive Plan and 2001 Incentive Plan. Recipients of the restricted stock have the right to vote such shares and receive dividends.
 
The following table summarizes restricted stock award activity for the three fiscal years ended December 30, 2012 :
 
 
December 30, 2012
 
January 1, 2012
 
January 2, 2011
 
Number
of
Shares
 
Weighted-
Average
Grant-
Date Fair
Value
 
Number
of
Shares
 
Weighted-
Average
Grant-
Date Fair
Value
 
Number
of
Shares
 
Weighted-
Average
Grant-
Date Fair
Value
 
(Shares in thousands)
Nonvested at beginning of year
672

 
$
23.62

 
578

 
$
22.00

 
451

 
$
22.49

Granted
358

 
25.86

 
460

 
26.31

 
413

 
21.20

Vested
(184
)
 
23.19

 
(272
)
 
23.96

 
(147
)
 
20.45

Forfeited
(65
)
 
24.03

 
(94
)
 
24.58

 
(139
)
 
21.17

Nonvested at end of year
781

 
$
24.71

 
672

 
$
23.62

 
578

 
$
22.00

 
The weighted-average per-share grant-date fair value of restricted stock awards granted during fiscal years 2012, 2011, and 2010 was $25.86 , $26.31 , and $21.20 , respectively. The fair value of restricted stock awards vested during fiscal years 2012, 2011, and 2010 was $4.3 million , $6.5 million , and $3.0 million , respectively. The total compensation expense recognized related to the restricted stock awards was $8.2 million in fiscal year 2012 , $6.5 million in fiscal year 2011 and $4.3 million in fiscal year 2010 .
 
As of December 30, 2012 , there was $9.2 million of total unrecognized compensation cost, net of forfeitures, related to nonvested restricted stock awards. That cost is expected to be recognized over a weighted-average period of 1.3 fiscal years.
 
Performance Units:     The Company’s performance unit program provides a cash award based on the achievement of specific performance criteria. A target number of units are granted at the beginning of a three-year performance period. The number of units earned at the end of the performance period is determined by multiplying the number of units granted by a performance factor ranging from 0% to 200% . Awards are determined by multiplying the number of units earned by the stock price at the end of the performance period, and are paid in cash and accounted for as a liability based award. The compensation expense associated with these units is recognized over the period that the performance targets are expected to be achieved. The Company granted 122,675 performance units, 89,828 performance units, and 129,879 performance units during fiscal years 2012, 2011, and 2010 , respectively. The weighted-average per-share grant-date fair value of performance units granted during fiscal years 2012, 2011, and 2010 was $26.18 , $26.71 , and $20.89 , respectively. The total compensation expense related to these performance units was $7.1 million , $3.7 million , and $2.0 million for fiscal years 2012, 2011, and 2010 , respectively. As of December 30, 2012 , there were 322,516 performance units outstanding subject to forfeiture, with a corresponding liability of $10.4 million recorded in accrued expenses and long-term liabilities.
 
Stock Awards:     The Company’s stock award program provides non-employee Directors an annual equity award. For fiscal years 2012, 2011, and 2010 the award equaled the number of shares of the Company’s common stock which has an aggregate fair market value of $100,000 on the date of the award. The stock award is prorated for non-employee Directors who serve for only a portion of the year. The shares are granted in May following the annual meeting of shareholders, on the third business day after the Company’s first quarter earnings release. The compensation expense associated with these stock awards is recognized when the stock award is granted. In fiscal years 2012, 2011, and 2010 , each non-employee Director was awarded 4,535 shares, 3,544 shares, and 4,337 shares, respectively. The weighted-average per-share grant-date fair value of stock awards granted during fiscal years 2012, 2011, and 2010 was $27.87 , $28.22 , and $23.06 , respectively. The total compensation expense recognized related to these stock awards was $0.7 million in fiscal year 2012 and $0.8 million in fiscal years 2011 and 2010 .
 
Employee Stock Purchase Plan:     In April 1999, the Company’s shareholders approved the 1998 Employee Stock Purchase Plan. In April 2005, the Compensation and Benefits Committee of the Board voted to amend the Employee Stock Purchase Plan, effective July 1, 2005, whereby participating employees have the right to purchase common stock at a price equal to 95% of the closing price on the last day of each six-month offering period. The number of shares which an employee may purchase, subject to certain aggregate limits, is determined by the employee’s voluntary contribution, which may not exceed 10% of the employee’s base compensation. During fiscal year 2012 , the Company issued 53,961 shares of common stock under the Company’s Employee Stock Purchase Plan at a weighted-average price of $24.51 per share. During fiscal year 2011 , the Company issued 102,970 shares under this plan at a weighted-average price of $21.33 per share. During fiscal year 2010 , the Company issued 85,607 shares under this plan at a weighted-average price of $21.80 per share. At December 30,

102
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


2012 there remains available for sale to employees an aggregate of 1.2 million shares of the Company’s common stock out of the 5.0 million shares authorized by shareholders for issuance under this plan.

Note 19:
Stockholders’ Equity
 
Comprehensive Income (Loss):
The components of accumulated other comprehensive income consisted of the following:
 
 
Foreign
Currency
Translation
Adjustment,
net of tax
 
Unrecognized
Prior Service
Costs, net of
tax
 
Unrealized
(Losses)
Gains on
Securities,
net of tax
 
Unrealized
and
Realized
(Losses) Gains on
Derivatives,
net of tax
 
Accumulated
Other
Comprehensive
Income (Loss)
 
(In thousands)
Balance, January 3, 2010
$
88,042

 
$
3,075

 
$
(164
)
 
$
(6,480
)
 
$
84,473

Current year change
(33,692
)
 
(1,013
)
 
64

 
1,196

 
(33,445
)
Balance, January 2, 2011
54,350

 
2,062

 
(100
)
 
(5,284
)
 
51,028

Current year change
1,814

 
107

 
(59
)
 
1,196

 
3,058

Balance, January 1, 2012
56,164

 
2,169

 
(159
)
 
(4,088
)
 
54,086

Current year change
11,363

 
(82
)
 
30

 
1,196

 
12,507

Balance, December 30, 2012
$
67,527

 
$
2,087

 
$
(129
)
 
$
(2,892
)
 
$
66,593

 
Stock Repurchase Program:
On October 23, 2008, the Company announced that the Board of Directors (the "Board") authorized the Company to repurchase up to 10.0 million shares of common stock under a stock repurchase program (the “Repurchase Program”). On August 31, 2010, the Company announced that the Board had authorized the Company to repurchase an additional 5.0 million shares of common stock under the Repurchase Program. The Repurchase Program expired on October 22, 2012. On October 24, 2012, the Board authorized the Company to repurchase up to 6.0 million shares of common stock under a new stock repurchase program (the "New Repurchase Program"). The New Repurchase Program will expire on October 24, 2014 unless terminated earlier by the Board, and may be suspended or discontinued at any time. During fiscal year 2012 , the Company did no t repurchase any shares of common stock under either of the stock repurchase programs. During fiscal year 2011 , the Company repurchased approximately 4.0 million shares of common stock in the open market at an aggregate cost of $107.8 million , including commissions, under the Repurchase Program. During fiscal year 2010 , the Company repurchased approximately 3.0 million shares of common stock in the open market at an aggregate cost of $71.5 million , including commissions, under the Repurchase Program. As of December 30, 2012 , all 6.0 million shares authorized by the Board under the New Repurchase Program remained available f or repurchase. From December 31, 2012 through February 22, 2013 , the Company repurchased approximately 2.6 million shares of common stock in the open market at an aggregate cost of $89.0 million , including commissions, under the New Repurchase Program.
 
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. During fiscal year 2012 , the Company repurchased 82,186 shares of common stock for this purpose at an aggregate cost of $2.1 million . During fiscal year 2011 , the Company repurchased 84,243 shares of common stock for this purpose at an aggregate cost of $2.2 million . During fiscal year 2010 , the Company repurchased 57,551 shares of common stock for this purpose at an aggregate cost of $1.3 million . The repurchased shares have been reflected as additional authorized but unissued shares, with the payments reflected in common stock and capital in excess of par value.
 
Dividends:
The Board declared a regular quarterly cash dividend of $0.07 per share in each quarter of fiscal year 2012 and in each quarter of fiscal year 2011 . At December 30, 2012 , the Company has accrued $8.0 million for dividends declared prior to year end payable in February 2013 . On January 25, 2013 , the Company announced that the Board had declared a quarterly dividend of $0.07 per share that will be payable in May 2013 . 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.
 

103


Note 20:
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 consolidated balance sheets. Unrealized gains and losses on the Company’s foreign currency contracts are recognized immediately in earnings for hedges designated as fair value and, for hedges designated as cash flow, the related unrealized gains or losses are deferred as a component of other comprehensive income in the accompanying consolidated balance sheets. Deferred gains and losses are recognized in income in the period in which the underlying anticipated transaction occurs and impacts earnings.
 
Principal hedged currencies include the British Pound, Canadian Dollar, Euro, Japanese Yen, and Singapore Dollar. The Company held forward foreign exchange contracts, designated as fair value hedges, with U.S. equivalent notional amounts totaling $64.3 million at December 30, 2012 and $268.9 million at January 1, 2012 , and the approximate fair value of these foreign currency derivative contracts was insignificant. The gains and losses realized on foreign currency derivative contracts are not material. The duration of these contracts was generally 30 days or less during fiscal years 2012, 2011, and 2010 .
 
During the fourth quarter of fiscal year 2012 , the Company entered into forward foreign exchange contracts with settlement dates in fiscal year 2013 and combined Euro denominated notional amounts of Euro 50.0 million , designated as cash flow hedges. The fair value of these currency derivative contracts at December 30, 2012 was $0.1 million . In May 2008 , the Company settled forward interest rate contracts with notional amounts totaling $150.0 million upon the issuance of its 2015 Notes, and recognized $8.4 million , net of taxes of $5.4 million , of accumulated derivative losses in other comprehensive income. The derivative losses are being amortized into interest expense when the hedged exposure affects interest expense. As of December 30, 2012 , the balance remaining in accumulated other comprehensive income related to the effective cash flow hedges was $2.9 million , net of taxes of $1.9 million . The Company amortized $2.0 million into interest expense during each of the fiscal years 2012, 2011, and 2010 .  

Note 21:
Fair Value Measurements
 
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments, marketable securities and accounts receivable. The Company believes it had no significant concentrations of credit risk as of December 30, 2012 .
 
The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during fiscal years 2012 and 2011 . 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.
 

104
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The following tables show the assets and liabilities carried at fair value measured on a recurring basis as of December 30, 2012 and January 1, 2012 classified in one of the three classifications described above:
 
 
Fair Value Measurements at December 30, 2012 Using:
 
Total Carrying
Value at
December 30,
2012
 
Quoted Prices in
Active Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable Inputs
(Level 3)
 
(In thousands)
Marketable securities
$
1,149

 
$
1,149

 
$
—

 
$
—

Foreign exchange derivative assets
274

 
—

 
274

 
—

Foreign exchange derivative liabilities
(294
)
 
—

 
(294
)
 
—

Contingent consideration
(3,017
)
 
—

 
—

 
(3,017
)

 
Fair Value Measurements at January 1, 2012 Using:
 
Total Carrying
Value at
January 1,
2012
 
Quoted Prices in
Active Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable Inputs
(Level 3)
 
(In thousands)
Marketable securities
$
1,105

 
$
1,105

 
$
—

 
$
—

Foreign exchange derivative liabilities, net
(213
)
 
—

 
(213
)
 
—

Contingent consideration
(20,298
)
 
—

 
—

 
(20,298
)
 
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 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 has classified its net liabilities for contingent consideration relating to its acquisitions of chemagen, Biopolymer-Technologie AG, ArtusLabs, Inc., ID Biological Systems, Inc., Dexela Limited and Haoyuan 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 these acquisitions is included within Note 2. 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 all acquisitions with open contingency periods, of up to $61.3 million as of December 30, 2012 . As of December 30, 2012 , the Company had recorded contingent consideration obligations relating to its acquisitions of Dexela and Haoyuan, with an estimated fair value of $3.0 million . The earnout periods for each of these acquisitions do not exceed three years from the acquisition date.


105
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


A reconciliation of the beginning and ending Level 3 net liabilities is as follows:
 
 
(In thousands)
Balance at January 3, 2010
$
(4,251
)
Additions
—

Amounts paid and foreign currency translation
2,717

Change in fair value (included within selling, general and administrative expenses)
(197
)
Balance at January 2, 2011
(1,731
)
Additions
(20,131
)
Amounts paid and foreign currency translation
1,908

Change in fair value (included within selling, general and administrative expenses)
(344
)
Balance at January 1, 2012
(20,298
)
Additions
(1,900
)
Amounts paid and foreign currency translation
17,433

Change in fair value (included within selling, general and administrative expenses)
1,748

Balance at December 30, 2012
$
(3,017
)
 
During the fourth quarter of fiscal year 2012 , the Company recorded $74.2 million of pre-tax intangible asset impairment charges related to certain trade names. A description of these impairment charges is included within Note 12. The fair value measurements were determined using a relief from royalty method, which incorporates unobservable inputs, thereby classifying the fair value measurements as a Level 3 measurement within the fair value hierarchy. The primary inputs used in the relief from royalty method, an income-based approach, included estimated prospective cash flows considering the revised useful lives and an estimated royalty rate that would be used by a market participant. The royalty rates ranged from 0.5% to 1.0% , the discount rates ranged from 11.0% to 12.0% , and the useful lives ranged from 1.0 to 8.0 years. The identified indefinite-lived intangibles related to the above impairment charges, had a carrying value of $76.4 million and a fair value of $4.5 million as of the impairment date, resulting in an impairment loss of $71.9 million . The identified definite-lived intangibles related to the above impairment charges, had a carrying value of $3.8 million and a fair value of $1.5 million as of the impairment date, resulting in an impairment loss of $2.3 million .
 
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, with a $700.0 million available limit, had amounts outstanding of $258.0 million and $298.0 million as of December 30, 2012 and January 1, 2012 , 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 fiscal year 2012 . 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 2015 Notes, with a face value of $150.0 million , had an aggregate carrying value of $150.0 million and a fair value of $165.4 million as of December 30, 2012 . The 2015 Notes had an aggregate carrying value of $150.0 million and a fair value of $165.7 million as of January 1, 2012 . The Company's 2021 Notes, with a face value of $500.0 million , had an aggregate carrying value of $497.2 million , net of $2.8 million of unamortized original issue discount, and a fair value of $558.3 million as of December 30, 2012 . The 2021 Notes had an aggregate carrying value of $496.9 million , net of $3.1 million of unamortized original issue discount, and a fair value of $518.3 million as of January 1, 2012 . The fair values of the 2015 Notes and the 2021 Notes are estimated using market quotes from brokers, or are based on current rates offered for similar debt. The Company's financing lease obligations had an aggregate carrying value of $34.6 million as of December 30, 2012 and approximated the fair value given the timing of the recognition of these obligations to the balance sheet date. As of December 30, 2012 , the 2015 Notes, 2021 Notes and financing lease obligations were classified as Level 2.

As of December 30, 2012 , 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.
 

106


Note 22:
Leases
 
The Company leases certain property and equipment under operating leases. Rental expense charged to continuing operations for fiscal years 2012, 2011, and 2010 amounted to $60.3 million , $49.1 million , and $46.8 million , respectively. Minimum rental commitments under noncancelable operating leases are as follows: $55.1 million in fiscal year 2013 , $34.8 million in fiscal year 2014 , $25.7 million in fiscal year 2015 , $19.2 million in fiscal year 2016 , $15.8 million in fiscal year 2017 and $58.9 million in fiscal year 2018 and thereafter .
 
Note 23:
Industry Segment and Geographic Area Information
 
The Company discloses information about its operating segments based on the way that management organizes the segments within the Company for making operating decisions and assessing financial performance.
 
The Company evaluates the performance of its operating segments based on revenue and operating income. Intersegment revenue and transfers are not significant. The 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. The principal products and services of these 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 technologies and applications 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 expense related to mark-to-market 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.


107
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Revenue and operating income (loss) by operating segment, excluding discontinued operations, are shown in the table below for the fiscal years ended:
 
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Human Health
 
 
 
 
 
Product revenue
$
888,006

 
$
754,046

 
$
672,217

Service revenue
156,128

 
130,361

 
121,514

Total revenue
1,044,134

 
884,407

 
793,731

Operating income from continuing operations (1)
73,727

 
99,306

 
97,855

Environmental Health
 
 
 
 
 
Product revenue
586,668

 
565,464

 
489,525

Service revenue
484,403

 
468,637

 
418,511

Total revenue
1,071,071

 
1,034,101

 
908,036

Operating income from continuing operations (1)
97,313

 
99,341

 
95,090

Corporate
 
 
 
 
 
Operating loss from continuing operations (2)
(72,497
)
 
(107,519
)
 
(35,377
)
Continuing Operations
 
 
 
 
 
Product revenue
$
1,474,674

 
$
1,319,510

 
$
1,161,742

Service revenue
640,531

 
598,998

 
540,025

Total revenue
2,115,205

 
1,918,508

 
1,701,767

Operating income from continuing operations
98,543

 
91,128

 
157,568

Interest and other expense (income), net (see Note 5)
47,956

 
26,774

 
(8,383
)
Income from continuing operations before income taxes
$
50,587

 
$
64,354

 
$
165,951

____________________________
(1)  
The pre-tax impairment charges have been included in the Human Health and Environmental Health operating income from continuing operations. The Company recognized $54.3 million of pre-tax impairment charges in the Human Health segment and also recognized $19.9 million of pre-tax impairment charges in the Environmental Health segment in fiscal year 2012 . The Company recognized a $3.0 million pre-tax impairment charge in the Human Health segment in fiscal year 2011 . There were no impairment charges during fiscal year 2010 .
 
(2)  
The expenses related to mark-to-market on postretirement benefit plans have been included in the Corporate operating loss from continuing operations, and together constituted a pre-tax loss of $31.8 million in fiscal year 2012 , a pre-tax loss of $67.9 million in fiscal year 2011 , and a pre-tax loss of $0.2 million in fiscal year 2010 .
 
Additional information relating to the Company’s reporting segments is as follows for the three fiscal years ended December 30, 2012 :
 
 
Depreciation and Amortization
Expense
 
Capital Expenditures
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
 
(In thousands)
Human Health
$
86,703

 
$
69,746

 
$
61,346

 
$
22,515

 
$
15,395

 
$
17,341

Environmental Health
37,634

 
39,480

 
26,284

 
16,498

 
13,190

 
15,005

Corporate
2,528

 
1,695

 
1,533

 
3,395

 
2,007

 
1,300

Continuing operations
$
126,865

 
$
110,921

 
$
89,163

 
$
42,408

 
$
30,592

 
$
33,646

Discontinued operations
$
—

 
$
—

 
$
10,177

 
$
—

 
$
—

 
$
9,090

 

108
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Additional information relating to the Company’s reporting segments is as follows for the fiscal years ended:

 
Total Assets
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
Human Health
$
2,246,389

 
$
2,254,768

 
$
1,772,524

Environmental Health
1,621,421

 
1,569,490

 
1,375,992

Corporate
33,952

 
31,181

 
60,203

Net current and long-term assets of discontinued operations
—

 
202

 
227

Total assets
$
3,901,762

 
$
3,855,641

 
$
3,208,946


The following geographic area information for continuing operations includes revenue based on location of external customer for the three fiscal years ended December 30, 2012 and net long-lived tangible assets based on physical location as of December 30, 2012 and January 1, 2012 :
 
 
Revenue
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
(In thousands)
U.S.
$
822,951

 
$
725,849

 
$
667,356

International:
 
 
 
 
 
China
216,425

 
164,005

 
131,541

United Kingdom
118,611

 
102,366

 
97,204

Germany
105,735

 
113,472

 
91,687

France
84,395

 
85,395

 
82,288

Japan
114,300

 
89,977

 
75,678

Italy
69,599

 
74,925

 
67,433

Other international
583,189

 
562,519

 
488,580

Total international
1,292,254

 
1,192,659

 
1,034,411

Total sales
$
2,115,205

 
$
1,918,508

 
$
1,701,767

 
 
Net Long-Lived Assets
 
December 30,
2012
 
January 1,
2012
 
(In thousands)
U.S.
$
205,083

 
$
147,883

International:
 
 
 
China
30,134

 
22,145

Finland
11,851

 
12,833

Singapore
6,366

 
5,663

Netherlands
3,900

 
4,074

Italy
3,303

 
3,288

Canada
2,079

 
2,747

Japan
2,310

 
2,552

United Kingdom
2,960

 
2,508

Germany
2,353

 
2,225

Other international
7,368

 
11,479

Total international
72,624

 
69,514

Total net long-lived assets
$
277,707

 
$
217,397




109
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Note 24:
Quarterly Financial Information (Unaudited)
 
Selected quarterly financial information is as follows for the fiscal years ended:
 
 
First
Quarter (2)
 
Second
Quarter (3)
 
Third
Quarter (4)
 
Fourth
Quarter (5)(6)
 
Year
 
(In thousands, except per share data)
December 30, 2012
 
 
 
 
 
 
 
 
 
Revenue
$
510,890

 
$
521,790

 
$
509,604

 
$
572,921

 
$
2,115,205

Gross profit
232,014

 
238,794

 
230,740

 
261,658

 
963,206

Restructuring and contract termination charges, net
6,159

 
5,203

 
9,672

 
4,103

 
25,137

Operating income from continuing operations
36,382

 
49,787

 
43,218

 
(30,844
)
 
98,543

Income from continuing operations before income taxes
23,552

 
38,429

 
31,346

 
(42,740
)
 
50,587

Income from continuing operations
22,076

 
33,568

 
28,989

 
(16,192
)
 
68,441

Net income
22,569

 
33,633

 
29,594

 
(15,856
)
 
69,940

Basic earnings per share:
 
 
 
 
 
 
 
 
 
Continuing operations
$
0.20

 
$
0.30

 
$
0.25

 
$
(0.14
)
 
$
0.60

Net income
0.20

 
0.30

 
0.26

 
(0.14
)
 
0.61

Diluted earnings per share:
 
 
 
 
 
 
 
 
 
Continuing operations
$
0.19

 
$
0.29

 
$
0.25

 
$
(0.14
)
 
$
0.60

Net income
0.20

 
0.29

 
0.26

 
(0.14
)
 
0.61

Cash dividends declared per common share
0.07

 
0.07

 
0.07

 
0.07

 
0.28

 
 
 
 
 
 
 
 
 
 
January 1, 2012 (1)
 
 
 
 
 
 
 
 
 
Revenue
$
447,178

 
$
479,065

 
$
452,935

 
$
539,330

 
$
1,918,508

Gross profit
200,311

 
209,194

 
199,356

 
238,939

 
847,800

Restructuring and contract termination charges, net
—

 
3,340

 
—

 
10,112

 
13,452

Operating income from continuing operations
41,431

 
39,419

 
36,135

 
(25,857
)
 
91,128

Income from continuing operations before income taxes
35,675

 
35,148

 
32,219

 
(38,688
)
 
64,354

Income from continuing operations
27,291

 
29,101

 
28,004

 
(83,224
)
 
1,172

Net income
24,913

 
29,761

 
36,622

 
(83,641
)
 
7,655

Basic earnings per share:
 
 
 
 
 
 
 
 
 
Continuing operations
$
0.24

 
$
0.26

 
$
0.25

 
$
(0.74
)
 
$
0.01

Net income
0.22

 
0.26

 
0.32

 
(0.74
)
 
0.07

Diluted earnings per share:
 
 
 
 
 
 
 
 
 
Continuing operations
$
0.24

 
$
0.26

 
$
0.25

 
$
(0.74
)
 
$
0.01

Net income
0.22

 
0.26

 
0.32

 
(0.74
)
 
0.07

Cash dividends declared per common share
0.07

 
0.07

 
0.07

 
0.07

 
0.28

____________________________
(1)  
Amounts adjusted for the adoption of new health care guidance which retrospectively presents certain bad debt expenses as a deduction of revenue instead of selling, general and administrative expenses. See Note 1 to the consolidated financial statements for a discussion of the changes and the impact of the changes for fiscal year 2011 .
(2)  
For the first quarter of fiscal year 2011 the adoption of new health care guidance decreased revenue and gross profit by $0.7 million and had no impact on net income.
(3)
For the second quarter of fiscal year 2011 the adoption of new health care guidance decreased revenue and gross profit by $0.4 million and had no impact on net income.

110
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


(4)
For the third quarter of fiscal year 2011 the adoption of new health care guidance decreased revenue and gross profit by $0.8 million and had no impact on net income.
(5)
The fourth quarter of fiscal year 2012 includes $31.8 million of defined benefit pension and other postretirement benefit expenses as a result of the mark-to-market. See Note 1 for a discussion of this accounting policy. The fourth quarter of fiscal year 2012 also includes pre-tax impairment charges of $74.2 million as a result of a review of certain trade names within the Company's portfolio as part of a realignment of its marketing strategy.
(6)
The fourth quarter of fiscal year 2011 includes $67.9 million of defined benefit pension and other postretirement benefit expenses as a result of the mark-to-market. See Note 1 for a discussion of this accounting policy. The fourth quarter of fiscal year 2011 includes adoption of new health care guidance which decreased revenue and gross profit by $0.9 million and had no impact on net income. The fourth quarter of fiscal year 2011 also includes a tax provision of $79.7 million related to the Company's planned $350.0 million repatriation of previously unremitted earnings.

Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
Not applicable.
 
Item 9A.
Controls and Procedures
 
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 30, 2012 . The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 30, 2012 , our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
 
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:
•
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
•
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
•
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
Our management assessed the effectiveness of our internal control over financial reporting as of December 30, 2012 . In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework.


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Based on this assessment, our management concluded that, as of December 30, 2012 , our internal control over financial reporting was effective based on those criteria.
 
Our registered public accounting firm has issued an attestation report on our internal control over financial reporting. This report appears below.


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Table of Contents


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Stockholders of PerkinElmer, Inc.
Waltham, Massachusetts
 
We have audited the internal control over financial reporting of PerkinElmer, Inc. and subsidiaries (the “Company”) as of December 30, 2012 , based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 30, 2012 , based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 30, 2012 of the Company and our report dated February 26, 2013 expressed an unqualified opinion on those financial statements and financial statement schedule.
 
/s/ D ELOITTE  & T OUCHE LLP
 
Boston, Massachusetts
February 26, 2013

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Changes in Internal Control Over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended December 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
Item 9B.
Other Information
 
Not applicable.

 

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Table of Contents


PART III

Item 10.
Directors, Executive Officers and Corporate Governance
 
The information required to be disclosed by this Item pursuant to Item 401 of Regulation S-K with respect to our executive officers is contained in Part I of this annual report on Form 10-K under the caption, “Executive Officers of the Registrant.” The remaining information required to be disclosed by the Item pursuant to Item 401 and Item 407 of Regulation S-K is contained in the proxy statement for our annual meeting of stockholders to be held on April 23, 2013 under the captions “Proposal No. 1 Election of Directors” and “Information Relating to Our Board of Directors and Its Committees” and is incorporated in this annual report on Form 10-K by reference.
 
The information required to be disclosed by this Item pursuant to Item 405 of Regulation S-K is contained in the proxy statement for our annual meeting of stockholders to be held on April 23, 2013 under the caption “Section 16(a) Beneficial Ownership Reporting Compliance,” and is incorporated in this annual report on Form 10-K by reference.
 
We have adopted a code of ethics, our Standards of Business Conduct, that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. Our Standards of Business Conduct, as well as our corporate governance guidelines and the charters for the audit, compensation and benefits, nominating and corporate governance, executive and finance committees of our Board of Directors, are each accessible under the “Corporate Governance” heading of the “Investors” section of our website, http://www.perkinelmer.com. This information is also available in print to any stockholder who requests it, by writing to PerkinElmer, Inc., 940 Winter Street, Waltham, Massachusetts 02451, Attention: Investor Relations. We also intend to disclose in the same location on our website, any amendments to, or waivers from, our Standards of Business Conduct that are required to be disclosed pursuant to the disclosure requirements of Item 5.05 of Form 8-K.
 
Item 11.
Executive Compensation
 
The information required to be disclosed by this Item pursuant to Item 402 and Item 407(e) of Regulation S-K is contained in the proxy statement for our annual meeting of stockholders to be held on April 23, 2013 under the captions “Information Relating to Our Board of Directors and Its Committees—Director Compensation,” “—Compensation Committee Interlocks and Insider Participation,” and “Executive Compensation,” and is incorporated in this annual report on Form 10-K by reference.
 
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
The information required to be disclosed by this Item pursuant to Item 403 of Regulation S-K is contained in the proxy statement for our annual meeting of stockholders to be held on April 23, 2013 under the caption “Beneficial Ownership of Common Stock,” and is incorporated in this annual report on Form 10-K by reference.
 
The information required to be disclosed by this Item pursuant to Item 201(d) of Regulation S-K is contained in the proxy statement for our annual meeting of stockholders to be held on April 23, 2013 under the caption “Executive Compensation—Equity Compensation Plan Information,” and is incorporated in this annual report on Form 10-K by reference.
 
Item 13.
Certain Relationships and Related Transactions, and Director Independence
 
The information required to be disclosed by this Item pursuant to Item 404 of Regulation S-K is contained in the proxy statement for our annual meeting of stockholders to be held on April 23, 2013 under the caption “Information Relating to Our Board of Directors and Its Committees—Certain Relationships and Policies on Related Party Transactions,” and is incorporated in this annual report on Form 10-K by reference.
 
The information required to be disclosed by this Item pursuant to Item 407(a) of Regulation S-K is contained in the proxy statement for our annual meeting of stockholders to be held on April 23, 2013 under the caption “Information Relating to Our Board of Directors and Its Committees—Determination of Independence,” and is incorporated in this annual report on Form 10-K by reference.
 
Item 14.
Principal Accountant Fees and Services
 
The information required to be disclosed by this Item pursuant to Item 9(e) of Schedule 14A is contained in the proxy statement for our annual meeting of stockholders to be held on April 23, 2013 under the caption “Information Relating to Our Board of Directors and Its Committees—Independent Registered Public Accounting Firm Fees and Other Matters”, and is incorporated in this annual report on Form 10-K by reference.


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PART IV

Item 15.
Exhibits and Financial Statement Schedules
 
(a) DOCUMENTS FILED AS PART OF THIS REPORT:
 
1. FINANCIAL STATEMENTS
 
Included in Part II, Item 8:
 
Report of Independent Registered Public Accounting Firm
 
Consolidated Statements of Operations for Each of the Three Fiscal Years in the Period Ended December 30, 2012
 
Consolidated Statements of Comprehensive Income for Each of the Three Fiscal Years in the Period Ended December 30, 2012
 
Consolidated Balance Sheets as of December 30, 2012 and January 1, 2012
 
Consolidated Statements of Stockholders’ Equity for Each of the Three Fiscal Years in the Period Ended December 30, 2012
 
Consolidated Statements of Cash Flows for Each of the Three Fiscal Years in the Period Ended December 30, 2012
 
Notes to Consolidated Financial Statements
 
2. FINANCIAL STATEMENT SCHEDULE
 
Schedule II—Valuation and Qualifying Accounts
 
We have omitted financial statement schedules, other than those we note above, because of the absence of conditions under which they are required, or because the required information is given in the financial statements or notes thereto.
 
3. EXHIBITS
 
Exhibit
No.
 
Exhibit Title
  2.1 (1)
 
Agreement and Plan of Merger, dated September 7, 2011, by and among PerkinElmer, Inc., PerkinElmer Hopkinton Co. and Caliper Life Sciences, Inc., filed with the Commission on September 13, 2011 as Exhibit 2.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
  3.1
 
PerkinElmer, Inc.'s Restated Articles of Organization, filed with the Commission on May 11, 2007 as Exhibit 3.1 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
  3.2
 
PerkinElmer, Inc.'s Amended and Restated By-Laws, filed with the Commission on April 28, 2009 as Exhibit 3.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
  4.1
 
Specimen Certificate of PerkinElmer, Inc.'s Common Stock, $1 par value, filed with the Commission on August 15, 2001 as Exhibit 4.1 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
  4.2
 
Indenture dated as of October 25, 2011 between PerkinElmer, Inc. and U.S. Bank National Association, filed with the Commission on October 27, 2011 as Exhibit 99.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
  4.3
 
Supplemental Indenture dated as of October 25, 2011 between PerkinElmer, Inc. and U.S. Bank National Association, filed with the Commission on October 27, 2011 as Exhibit 99.2 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
  4.4
 
Second Supplemental Indenture dated as of December 22, 2011 between PerkinElmer, Inc. and U.S. Bank National Association, filed with the Commission on February 28, 2012 as Exhibit 4.4 to our annual report on Form 10-K and herein incorporated by reference.
 
 
 

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Exhibit
No.
 
Exhibit Title
10.1
 
Second Amended and Restated Credit Agreement, dated as of December 16, 2011, among PerkinElmer, Inc., Wallac Oy, and PerkinElmer Health Sciences, Inc. as Borrowers, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Barclays Capital as Syndication Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Capital as Joint Lead Arrangers and Joint Book Managers, and the other Lenders party thereto, filed with the Commission on December 21, 2011 as Exhibit 10.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.2
 
Note Purchase Agreement, dated as of May 30, 2008 by and among PerkinElmer, Inc. and the Northwestern Mutual Life Insurance Company, New York Life Insurance Company, New York Life Insurance and Annuity Corporation, New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account, Aviva Life and Annuity Company, American Investors Life Insurance Company, the Lincoln National Life Insurance Company, Physicians Life Insurance Company, Hartford Life and Accident Insurance Company, Allianz Life Insurance Company of North America, Massachusetts Mutual Life Insurance Company, C.M. Life Insurance Company, Hakone Fund II LLC, Great-West Life & Annuity Insurance Company, Knights of Columbus, the Ohio National Life Insurance Company and Ohio National Life Assurance Corporation, filed with the Commission on May 15, 2009 as Exhibit 10.18 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
10.3*
 
Employment Contracts:
 
 
 
 
 
(1) Third Amended and Restated Employment Agreement between PerkinElmer, Inc. and Robert F. Friel, dated as of December 16, 2008, filed with the Commission on February 26, 2009 as Exhibit 10.4(2) to our annual report on Form 10-K and herein incorporated by reference;
 
 
 
 
 
(2) Amended and Restated Employment Agreement between PerkinElmer, Inc. and Daniel R. Marshak, dated as of December 15, 2008, filed with the Commission on February 26, 2009 as Exhibit 10.4(5) to our annual report on Form 10-K and herein incorporated by reference;
 
 
 
 
 
(3) Employment Agreement by and between Joel S. Goldberg and PerkinElmer, Inc. dated as of July 21, 2008, filed with the Commission on August 8, 2008 as Exhibit 10.1 to our quarterly report on Form 10-Q and herein incorporated by reference;
 
 
 
 
 
(4) Employment Agreement by and between Frank Anders Wilson and PerkinElmer, Inc. dated as of April 28, 2009, filed with the Commission on April 30, 2009 as Exhibit 10.1 to our current report on Form 8-K and herein incorporated by reference;
 
 
 
 
 
(5) Employment Agreement by and between PerkinElmer, Inc. and John R. Letcher dated as of February 1, 2010, filed with the Commission on March 1, 2010 as Exhibit 10.4(9) to our annual report on Form 10-K and herein incorporated by reference;
 
 
 
 
 
(6) Form of Amendment, entered into by and between PerkinElmer, Inc. and each of the following executive officers on the dates indicated below, filed with the Commission on March 1, 2011 as Exhibit 10.4(7) to our annual report on Form 10-K and herein incorporated by reference:
 
 
 
 
 
Executive Officer
Date
 
 
Joel S. Goldberg
John R. Letcher
Daniel R. Marshak
Frank Anders Wilson
December 3, 2010
December 13, 2010
December 17, 2010
December 21, 2010
 
 
 
 
 
 
 
(7) Employment Agreement between Andrew Okun and PerkinElmer, Inc. dated as of April 26, 2011, filed with the Commission on April 29, 2011 as Exhibit 10.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
 
 
(8) Employment Agreement between James Corbett and PerkinElmer, Inc. dated as of February 1, 2012, filed with the Commission on May 8, 2012 as Exhibit 10.1 to our Quarterly Report on Form 10-Q and herein incorporated by reference.
 
 
 
 
 
(9) Employment Agreement between Maurice H. Tenney and PerkinElmer, Inc. dated as of February 1, 2012, filed with the Commission on May 8, 2012 as Exhibit 10.2 to our Quarterly Report on Form 10-Q and herein incorporated by reference.
 
 
 
10.4*
 
PerkinElmer, Inc.'s 2005 Incentive Plan, filed with the Commission on March 18, 2005 as Appendix A to our definitive proxy statement on Schedule 14A and herein incorporated by reference.
 
 
 
10.5*
 
PerkinElmer, Inc.'s Amended and Restated 2001 Incentive Plan, filed with the Commission on November 13, 2006 as Exhibit 10.1 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
10.6*
 
PerkinElmer, Inc.'s 2009 Incentive Plan, filed with the Commission on March 20, 2009 as Appendix A to our definitive proxy statement on Schedule 14A and herein incorporated by reference.
 
 
 

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Exhibit
No.
 
Exhibit Title
10.7*
 
PerkinElmer, Inc.'s 2008 Deferred Compensation Plan, filed with the Commission on December 12, 2008 as Exhibit 10.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.8*
 
First Amendment to PerkinElmer, Inc.'s 2008 Deferred Compensation Plan, filed with the Commission on March 1, 2011 as Exhibit 10.9 to our annual report on Form 10-K and herein incorporated by reference.
 
 
 
10.9*
 
PerkinElmer, Inc.'s 2008 Supplemental Executive Retirement Plan, filed with the Commission on December 12, 2008 as Exhibit 10.2 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.10*
 
PerkinElmer, Inc.'s Performance Unit Program Description, filed with the Commission on February 6, 2009 as Exhibit 10.10 to our annual report on Form 10-K and herein incorporated by reference.
 
 
 
10.11*
 
PerkinElmer, Inc.'s Performance Incentive Plan (Executive Officers), filed with the Commission on February 6, 2009 as Exhibit 10.11 to our annual report on Form 10-K and herein incorporated by reference.
 
 
 
10.12*
 
PerkinElmer, Inc.'s Amended and Restated Life Sciences Incentive Plan, filed with the Commission on November 13, 2006 as Exhibit 10.2 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
10.13*
 
PerkinElmer, Inc. 1998 Employee Stock Purchase Plan as Amended and Restated on December 10, 2009, filed with the Commission on March 1, 2010 as Exhibit 10.15 to our annual report on Form 10-K and herein incorporated by reference.
 
 
 
10.14
 
Stock Purchase Agreement, dated as of April 12, 2010, by and among PerkinElmer, Inc., SGL Holdings Company, LLC, SGL NewCo, Inc. and the Equity Holders named therein, filed with the Commission on May 13, 2010 as Exhibit 2.1 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
10.15
 
Master Purchase and Sales Agreement between PerkinElmer, Inc. and IDS Acquisition Corp., dated as of August 31, 2010, filed with the Commission on September 3, 2010 as Exhibit 99.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.16*
 
Amendment to Vested Option Awards from PerkinElmer, Inc. to Robert F. Friel dated June 23, 2004, filed with the Commission on August 6, 2004 as Exhibit 10.4(b) to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
10.17*
 
Form of Stock Option Agreement given by PerkinElmer, Inc. to its executive officers for use under the 2005 Incentive Plan, filed with the Commission on November 13, 2006 as Exhibit 10.3 to our quarterly report on Form
10-Q and herein incorporated by reference.
 
 
 
10.18*
 
Form of Stock Option Agreement given by PerkinElmer, Inc. to its chairman and chief executive officer for use under the 2005 Incentive Plan, filed with the Commission on November 13, 2006 as Exhibit 10.4 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
10.19*
 
Form of Stock Option Agreement given by PerkinElmer, Inc. to its non-employee directors for use under the 2005 Incentive Plan, filed with the Commission on March 1, 2007 as Exhibit 10.23 to our annual report on Form 10-K and herein incorporated by reference.
 
 
 
10.20*
 
PerkinElmer, Inc.'s Form of Restricted Stock Agreement with time-based vesting under the 2005 Incentive Plan, filed with the Commission on December 12, 2008 as Exhibit 10.3 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.21*
 
PerkinElmer, Inc.'s Form of Restricted Stock Agreement with performance-based vesting under the 2005 Incentive Plan, filed with the Commission on December 12, 2008 as Exhibit 10.4 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.22*
 
PerkinElmer, Inc.'s Form of Restricted Stock Unit Agreement with time-based vesting under the 2005 Incentive Plan, filed with the Commission on December 12, 2008 as Exhibit 10.5 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.23*
 
PerkinElmer, Inc.'s Form of Restricted Stock Unit Agreement with performance-based vesting under the 2005 Incentive Plan, filed with the Commission on December 12, 2008 as Exhibit 10.6 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.24*
 
Form of Stock Option Agreement given by PerkinElmer, Inc. to its chief executive officer for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.2 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.25*
 
Form of Stock Option Agreement given by PerkinElmer, Inc. to its executive officers for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.3 to our current report on Form 8-K and herein incorporated by reference.
 
 
 

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Exhibit
No.
 
Exhibit Title
10.26*
 
Form of Stock Option Agreement given by PerkinElmer, Inc. to its non-employee directors for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.4 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.27*
 
Form of Restricted Stock Agreement with time-based vesting for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.5 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.28*
 
Form of Restricted Stock Agreement with performance-based vesting for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.6 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.29*
 
Form of Restricted Stock Unit Agreement with time-based vesting for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.7 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.30*
 
Form of Restricted Stock Unit Agreement with performance-based vesting for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.8 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.31*
 
Form of Restricted Stock Agreement with time-based vesting for use under the 2009 Incentive Plan, filed with the Commission on May 10, 2011 as Exhibit 10.2 to our Quarterly Report on Form 10-Q and herein incorporated by reference.
 
 
 
10.32*
 
Form of Stock Option Agreement for use under the 2009 Incentive Plan, filed with the Commission on May 10, 2011 as Exhibit 10.3 to our Quarterly Report on Form 10-Q and herein incorporated by reference.
 
 
 
10.33*
 
Key Employee Agreement, by and between E. Kevin Hrusovksy and Caliper Technologies Corp. dated June 8, 2003, filed with the Commission on August 14, 2003 as Exhibit 10.56 to Caliper Technologies Corp. Quarterly Report on Form 10-Q and herein incorporated by reference.
 
 
 
10.34*
 
Caliper Life Sciences, Inc. Key Employee Change of Control and Severance Benefit Plan, Amended and Restated as of December 8, 2010, filed with the Commission on March 11, 2011 as Exhibit 10.29 to Caliper Life Sciences, Inc. Annual Report on Form 10-K and herein incorporated by reference.
 
 
 
10.35*
 
Letter Agreement, by and between E. Kevin Hrusovsky and PerkinElmer, Inc. dated December 12, 2012, attached hereto as Exhibit 10.35.
 
 
 
10.36*
 
PerkinElmer, Inc. Savings Plan Amended and Restated effective January 1, 2012, attached hereto as Exhibit 10.36.
 
 
 
10.37*
 
PerkinElmer, Inc. Employees Retirement Plan Amended and Restated effective January 1, 2012, attached hereto as Exhibit 10.37.
 
 
 
12.1
 
Statement regarding computation of ratio of earnings to fixed charges, attached hereto as Exhibit 12.1.
 
 
 
21
 
Subsidiaries of PerkinElmer, Inc., attached hereto as Exhibit 21.
 
 
 
23
 
Consent of Independent Registered Public Accounting Firm, attached hereto as Exhibit 23.
 
 
 
31.1
 
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, attached hereto as Exhibit 31.1.
 
 
 
31.2
 
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, attached hereto as Exhibit 31.2.
 
 
 
32.1
 
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, attached hereto as Exhibit 32.1.
 
 
 
101.INS
 
XBRL Instance Document.
 
 
 
101.SCH
 
XBRL Taxonomy Extension Schema Document.
 
 
 
101.CAL
 
XBRL Calculation Linkbase Document.
 
 
 
101.DEF
 
XBRL Definition Linkbase Document.
 
 
 
101.LAB
 
XBRL Labels Linkbase Document.
 
 
 
101.PRE
 
XBRL Presentation Linkbase Document.
____________________________

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(1)  
The exhibits and schedules to this agreement have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. The registrant agrees to furnish copies of any of such exhibits or schedules to the SEC upon request.
*
Management contract or compensation plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K.
 
Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language):
 
(i) Consolidated Statements of Operations for each of the three years in the period ended December 30, 2012 , (ii) Consolidated Balance Sheets as of December 30, 2012 and January 1, 2012 , (iii) Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 30, 2012 , (iv) Consolidated Statements of Stockholders' Equity for each of the three years in the period ended December 30, 2012 , (v) Consolidated Statements of Cash Flows for each of the three years in the period ended December 30, 2012 , (vi) Notes to Consolidated Financial Statements, and (vii) Financial Schedule of Valuation and Qualifying Accounts.
 


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SCHEDULE II
 
PERKINELMER, INC. AND SUBSIDIARIES
 
VALUATION AND QUALIFYING ACCOUNTS
For the Three Years Ended December 30, 2012
 
Description
 
Balance at
Beginning of
Year
 
Provisions
 
Charges/
Write-
offs
 
Other (1)
 
Balance
at End
of Year
   
 
(In thousands)
Reserve for doubtful accounts:
 
 
 
 
 
 
 
 
 
 
Year ended January 2, 2011
 
$
22,311

 
$
5,374

 
$
(4,706
)
 
$
697

 
$
23,676

Year ended January 1, 2012
 
23,676

 
6,984

 
(7,824
)
 
765

 
23,601

Year ended December 30, 2012
 
$
23,601

 
$
4,755

 
$
(4,936
)
 
$
(58
)
 
$
23,362

____________________________
(1)  
Other amounts primarily relate to the impact of acquisitions and foreign exchange movements.


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SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
Signature
 
PERKINELMER, INC.
Title
 
Date
 
 
 
 
 
 
By:
/ S /     R OBERT  F. F RIEL
 
Chairman, Chief Executive Officer
 
February 26, 2013
 
Robert F. Friel
 
and President
(Principal Executive Officer)
 
 
 
 
 
 
 
 
By:
/ S /     F RANK  A. W ILSON
 
Sr. Vice President and
 
February 26, 2013
 
Frank A. Wilson
 
Chief Financial Officer
(Principal Financial Officer)
 
 
 
 
 
 
 
 
By:
/ S /     A NDREW  O KUN
 
Vice President and
 
February 26, 2013
 
Andrew Okun
 
Chief Accounting Officer
(Principal Accounting Officer)
 
 
 

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POWER OF ATTORNEY AND SIGNATURES
 
We, the undersigned officers and directors of PerkinElmer, Inc., hereby severally constitute Robert F. Friel and Frank A. Wilson, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names, in the capacities indicated below, this Annual Report on Form 10-K and any and all amendments to said Annual Report on Form 10-K, and generally to do all such things in our name and behalf in our capacities as officers and directors to enable PerkinElmer, Inc. to comply with the provisions of the Securities Exchange Act of 1934, and all requirements of the Securities and Exchange Commission, hereby rectifying and confirming signed by our said attorneys, and any and all amendments thereto.
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
 
 
Signature
 
Title
 
Date
 
 
 
 
 
 
By:
/ S /     R OBERT  F. F RIEL
 
Chairman, Chief Executive Officer
 
February 26, 2013
 
Robert F. Friel
 
and President
(Principal Executive Officer)
 
 
By:
/ S /     F RANK  A. W ILSON
 
Sr. Vice President and
 
February 26, 2013
 
Frank A. Wilson
 
Chief Financial Officer
(Principal Financial Officer)
 
 
By:
/ S /     A NDREW  O KUN
 
Vice President and
 
February 26, 2013
 
Andrew Okun
 
Chief Accounting Officer
(Principal Accounting Officer)
 
 
By:
/ S /     P ETER  B ARRETT
 
Director
 
February 26, 2013
 
Peter Barrett
 
 
 
 
By:
/ S /     N ICHOLAS  A. L OPARDO
 
Director
 
February 26, 2013
 
Nicholas A. Lopardo
 
 
 
 
By:
/ S /     A LEXIS  P. M ICHAS
 
Director
 
February 26, 2013
 
Alexis P. Michas
 
 
 
 
By:
/ S /     J AMES  C. M ULLEN
 
Director
 
February 26, 2013
 
James C. Mullen
 
 
 
 
By:
/ S /     V ICKI  L. S ATO, Ph.D
 
Director
 
February 26, 2013
 
Vicki L. Sato, Ph.D
 
 
 
 
By:
/ S /     K ENTON  J. S ICCHITANO
 
Director
 
February 26, 2013
 
Kenton J. Sicchitano
 
 
 
 
By:
/ S /     P ATRICK  J. S ULLIVAN
 
Director
 
February 26, 2013
 
Patrick J. Sullivan
 
 
 
 


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EXHIBIT INDEX
 
Exhibit
No.
 
Exhibit Title
  2.1 (1)
 
Agreement and Plan of Merger, dated September 7, 2011, by and among PerkinElmer, Inc., PerkinElmer Hopkinton Co. and Caliper Life Sciences, Inc., filed with the Commission on September 13, 2011 as Exhibit 2.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
  3.1
 
PerkinElmer, Inc.'s Restated Articles of Organization, filed with the Commission on May 11, 2007 as Exhibit 3.1 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
  3.2
 
PerkinElmer, Inc.'s Amended and Restated By-Laws, filed with the Commission on April 28, 2009 as Exhibit 3.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
  4.1
 
Specimen Certificate of PerkinElmer, Inc.'s Common Stock, $1 par value, filed with the Commission on August 15, 2001 as Exhibit 4.1 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
  4.2
 
Indenture dated as of October 25, 2011 between PerkinElmer, Inc. and U.S. Bank National Association, filed with the Commission on October 27, 2011 as Exhibit 99.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
  4.3
 
Supplemental Indenture dated as of October 25, 2011 between PerkinElmer, Inc. and U.S. Bank National Association, filed with the Commission on October 27, 2011 as Exhibit 99.2 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
  4.4
 
Second Supplemental Indenture dated as of December 22, 2011 between PerkinElmer, Inc. and U.S. Bank National Association, filed with the Commission on February 28, 2012 as Exhibit 4.4 to our annual report on Form 10-K and herein incorporated by reference.
 
 
 
10.1
 
Second Amended and Restated Credit Agreement, dated as of December 16, 2011, among PerkinElmer, Inc., Wallac Oy, and PerkinElmer Health Sciences, Inc. as Borrowers, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Barclays Capital as Syndication Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Capital as Joint Lead Arrangers and Joint Book Managers, and the other Lenders party thereto, filed with the Commission on December 21, 2011 as Exhibit 10.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.2
 
Note Purchase Agreement, dated as of May 30, 2008 by and among PerkinElmer, Inc. and the Northwestern Mutual Life Insurance Company, New York Life Insurance Company, New York Life Insurance and Annuity Corporation, New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account, Aviva Life and Annuity Company, American Investors Life Insurance Company, the Lincoln National Life Insurance Company, Physicians Life Insurance Company, Hartford Life and Accident Insurance Company, Allianz Life Insurance Company of North America, Massachusetts Mutual Life Insurance Company, C.M. Life Insurance Company, Hakone Fund II LLC, Great-West Life & Annuity Insurance Company, Knights of Columbus, the Ohio National Life Insurance Company and Ohio National Life Assurance Corporation, filed with the Commission on May 15, 2009 as Exhibit 10.18 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
10.3*
 
Employment Contracts:
 
 
 
 
 
(1) Third Amended and Restated Employment Agreement between PerkinElmer, Inc. and Robert F. Friel, dated as of December 16, 2008, filed with the Commission on February 26, 2009 as Exhibit 10.4(2) to our annual report on Form 10-K and herein incorporated by reference;
 
 
 
 
 
(2) Amended and Restated Employment Agreement between PerkinElmer, Inc. and Daniel R. Marshak, dated as of December 15, 2008, filed with the Commission on February 26, 2009 as Exhibit 10.4(5) to our annual report on Form 10-K and herein incorporated by reference;
 
 
 
 
 
(3) Employment Agreement by and between Joel S. Goldberg and PerkinElmer, Inc. dated as of July 21, 2008, filed with the Commission on August 8, 2008 as Exhibit 10.1 to our quarterly report on Form 10-Q and herein incorporated by reference;
 
 
 
 
 
(4) Employment Agreement by and between Frank Anders Wilson and PerkinElmer, Inc. dated as of April 28, 2009, filed with the Commission on April 30, 2009 as Exhibit 10.1 to our current report on Form 8-K and herein incorporated by reference;
 
 
 
 
 
(5) Employment Agreement by and between PerkinElmer, Inc. and John R. Letcher dated as of February 1, 2010, filed with the Commission on March 1, 2010 as Exhibit 10.4(9) to our annual report on Form 10-K and herein incorporated by reference;
 
 
 

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Exhibit
No.
 
Exhibit Title
 
 
(6) Form of Amendment, entered into by and between PerkinElmer, Inc. and each of the following executive officers on the dates indicated below, filed with the Commission on March 1, 2011 as Exhibit 10.4(7) to our annual report on Form 10-K and herein incorporated by reference:
 
 
 
 
 
Executive Officer
Date
 
 
Joel S. Goldberg
John R. Letcher
Daniel R. Marshak
Frank Anders Wilson
December 3, 2010
December 13, 2010
December 17, 2010
December 21, 2010
 
 
 
 
 
 
 
(7) Employment Agreement between Andrew Okun and PerkinElmer, Inc. dated as of April 26, 2011, filed with the Commission on April 29, 2011 as Exhibit 10.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
 
 
(8) Employment Agreement between James Corbett and PerkinElmer, Inc. dated as of February 1, 2012, filed with the Commission on May 8, 2012 as Exhibit 10.1 to our Quarterly Report on Form 10-Q and herein incorporated by reference.
 
 
 
 
 
(9) Employment Agreement between Maurice H. Tenney and PerkinElmer, Inc. dated as of February 1, 2012, filed with the Commission on May 8, 2012 as Exhibit 10.2 to our Quarterly Report on Form 10-Q and herein incorporated by reference.
 
 
 
10.4*
 
PerkinElmer, Inc.'s 2005 Incentive Plan, filed with the Commission on March 18, 2005 as Appendix A to our definitive proxy statement on Schedule 14A and herein incorporated by reference.
 
 
 
10.5*
 
PerkinElmer, Inc.'s Amended and Restated 2001 Incentive Plan, filed with the Commission on November 13, 2006 as Exhibit 10.1 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
10.6*
 
PerkinElmer, Inc.'s 2009 Incentive Plan, filed with the Commission on March 20, 2009 as Appendix A to our definitive proxy statement on Schedule 14A and herein incorporated by reference.
 
 
 
10.7*
 
PerkinElmer, Inc.'s 2008 Deferred Compensation Plan, filed with the Commission on December 12, 2008 as Exhibit 10.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.8*
 
First Amendment to PerkinElmer, Inc.'s 2008 Deferred Compensation Plan, filed with the Commission on March 1, 2011 as Exhibit 10.9 to our annual report on Form 10-K and herein incorporated by reference.
 
 
 
10.9*
 
PerkinElmer, Inc.'s 2008 Supplemental Executive Retirement Plan, filed with the Commission on December 12, 2008 as Exhibit 10.2 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.10*
 
PerkinElmer, Inc.'s Performance Unit Program Description, filed with the Commission on February 6, 2009 as Exhibit 10.10 to our annual report on Form 10-K and herein incorporated by reference.
 
 
 
10.11*
 
PerkinElmer, Inc.'s Performance Incentive Plan (Executive Officers), filed with the Commission on February 6, 2009 as Exhibit 10.11 to our annual report on Form 10-K and herein incorporated by reference.
 
 
 
10.12*
 
PerkinElmer, Inc.'s Amended and Restated Life Sciences Incentive Plan, filed with the Commission on November 13, 2006 as Exhibit 10.2 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
10.13*
 
PerkinElmer, Inc. 1998 Employee Stock Purchase Plan as Amended and Restated on December 10, 2009, filed with the Commission on March 1, 2010 as Exhibit 10.15 to our annual report on Form 10-K and herein incorporated by reference.
 
 
 
10.14
 
Stock Purchase Agreement, dated as of April 12, 2010, by and among PerkinElmer, Inc., SGL Holdings Company, LLC, SGL NewCo, Inc. and the Equity Holders named therein, filed with the Commission on May 13, 2010 as Exhibit 2.1 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
10.15
 
Master Purchase and Sales Agreement between PerkinElmer, Inc. and IDS Acquisition Corp., dated as of August 31, 2010, filed with the Commission on September 3, 2010 as Exhibit 99.1 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.16*
 
Amendment to Vested Option Awards from PerkinElmer, Inc. to Robert F. Friel dated June 23, 2004, filed with the Commission on August 6, 2004 as Exhibit 10.4(b) to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
10.17*
 
Form of Stock Option Agreement given by PerkinElmer, Inc. to its executive officers for use under the 2005 Incentive Plan, filed with the Commission on November 13, 2006 as Exhibit 10.3 to our quarterly report on Form
10-Q and herein incorporated by reference.
 
 
 

125
Table of Contents


Exhibit
No.
 
Exhibit Title
10.18*
 
Form of Stock Option Agreement given by PerkinElmer, Inc. to its chairman and chief executive officer for use under the 2005 Incentive Plan, filed with the Commission on November 13, 2006 as Exhibit 10.4 to our quarterly report on Form 10-Q and herein incorporated by reference.
 
 
 
10.19*
 
Form of Stock Option Agreement given by PerkinElmer, Inc. to its non-employee directors for use under the 2005 Incentive Plan, filed with the Commission on March 1, 2007 as Exhibit 10.23 to our annual report on Form 10-K and herein incorporated by reference.
 
 
 
10.20*
 
PerkinElmer, Inc.'s Form of Restricted Stock Agreement with time-based vesting under the 2005 Incentive Plan, filed with the Commission on December 12, 2008 as Exhibit 10.3 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.21*
 
PerkinElmer, Inc.'s Form of Restricted Stock Agreement with performance-based vesting under the 2005 Incentive Plan, filed with the Commission on December 12, 2008 as Exhibit 10.4 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.22*
 
PerkinElmer, Inc.'s Form of Restricted Stock Unit Agreement with time-based vesting under the 2005 Incentive Plan, filed with the Commission on December 12, 2008 as Exhibit 10.5 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.23*
 
PerkinElmer, Inc.'s Form of Restricted Stock Unit Agreement with performance-based vesting under the 2005 Incentive Plan, filed with the Commission on December 12, 2008 as Exhibit 10.6 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.24*
 
Form of Stock Option Agreement given by PerkinElmer, Inc. to its chief executive officer for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.2 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.25*
 
Form of Stock Option Agreement given by PerkinElmer, Inc. to its executive officers for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.3 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.26*
 
Form of Stock Option Agreement given by PerkinElmer, Inc. to its non-employee directors for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.4 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.27*
 
Form of Restricted Stock Agreement with time-based vesting for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.5 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.28*
 
Form of Restricted Stock Agreement with performance-based vesting for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.6 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.29*
 
Form of Restricted Stock Unit Agreement with time-based vesting for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.7 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.30*
 
Form of Restricted Stock Unit Agreement with performance-based vesting for use under the 2009 Incentive Plan, filed with the Commission on April 28, 2009 as Exhibit 10.8 to our current report on Form 8-K and herein incorporated by reference.
 
 
 
10.31*
 
Form of Restricted Stock Agreement with time-based vesting for use under the 2009 Incentive Plan, filed with the Commission on May 10, 2011 as Exhibit 10.2 to our Quarterly Report on Form 10-Q and herein incorporated by reference.
 
 
 
10.32*
 
Form of Stock Option Agreement for use under the 2009 Incentive Plan, filed with the Commission on May 10, 2011 as Exhibit 10.3 to our Quarterly Report on Form 10-Q and herein incorporated by reference.
 
 
 
10.33*
 
Key Employee Agreement, by and between E. Kevin Hrusovksy and Caliper Technologies Corp. dated June 8, 2003, filed with the Commission on August 14, 2003 as Exhibit 10.56 to Caliper Technologies Corp. Quarterly Report on Form 10-Q and herein incorporated by reference.
 
 
 
10.34*
 
Caliper Life Sciences, Inc. Key Employee Change of Control and Severance Benefit Plan, Amended and Restated as of December 8, 2010, filed with the Commission on March 11, 2011 as Exhibit 10.29 to Caliper Life Sciences, Inc. Annual Report on Form 10-K and herein incorporated by reference.
 
 
 
10.35*
 
Letter Agreement, by and between E. Kevin Hrusovsky and PerkinElmer, Inc. dated December 12, 2012, attached hereto as Exhibit 10.35.
 
 
 

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Exhibit
No.
 
Exhibit Title
10.36*
 
PerkinElmer, Inc. Savings Plan Amended and Restated effective January 1, 2012, attached hereto as Exhibit 10.36.
 
 
 
10.37*
 
PerkinElmer, Inc. Employees Retirement Plan Amended and Restated effective January 1, 2012, attached hereto as Exhibit 10.37.
 
 
 
12.1
 
Statement regarding computation of ratio of earnings to fixed charges, attached hereto as Exhibit 12.1.
 
 
 
21
 
Subsidiaries of PerkinElmer, Inc., attached hereto as Exhibit 21.
 
 
 
23
 
Consent of Independent Registered Public Accounting Firm, attached hereto as Exhibit 23.
 
 
 
31.1
 
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, attached hereto as Exhibit 31.1.
 
 
 
31.2
 
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, attached hereto as Exhibit 31.2.
 
 
 
32.1
 
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, attached hereto as Exhibit 32.1.
 
 
 
101.INS
 
XBRL Instance Document.
 
 
 
101.SCH
 
XBRL Taxonomy Extension Schema Document.
 
 
 
101.CAL
 
XBRL Calculation Linkbase Document.
 
 
 
101.DEF
 
XBRL Definition Linkbase Document.
 
 
 
101.LAB
 
XBRL Labels Linkbase Document.
 
 
 
101.PRE
 
XBRL Presentation Linkbase Document.
____________________________
(1)  
The exhibits and schedules to this agreement have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. The registrant agrees to furnish copies of any of such exhibits or schedules to the SEC upon request.
*
Management contract or compensation plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K.
 
Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language):
 
(i) Consolidated Statements of Operations for each of the three years in the period ended December 30, 2012 , (ii) Consolidated Balance Sheets as of December 30, 2012 and January 1, 2012 , (iii) Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 30, 2012 , (iv) Consolidated Statements of Stockholders' Equity for each of the three years in the period ended December 30, 2012 , (v) Consolidated Statements of Cash Flows for each of the three years in the period ended December 30, 2012 , (vi) Notes to Consolidated Financial Statements, and (vii) Financial Schedule of Valuation and Qualifying Accounts.
 




127



Exhibit 10.35




December 12, 2012

E. Kevin Hrusovsky


Dear Kevin,

The purpose of this letter is to summarize a change to the terms of your employment with PerkinElmer, Inc. ("the Company") effective as of December 7, 2012, as follows:

•
The Company will assume the severance obligations of Caliper Life Sciences set forth in the Key Employee Change of Control and Severance Benefit Plan Amended and Restated as of December 8, 2010 between you and Caliper Life Sciences (the "Caliper Change of Control Agreement"), provided that, by signing below, you agree that (i) PerkinElmer's obligations under the Caliper Change of Control Agreement shall only apply as to the Change of Control (as defined in the Caliper Change of Control Agreement) created by the acquisition of Caliper Life Sciences by PerkinElmer, Inc. and shall not apply in connection with a change in control of the Company, and (ii) unless earlier terminated by mutual agreement, the Caliper Change of Control Agreement shall terminate and be of no further force or effect as of June 7, 2013. You agree that the Caliper Change of Control Agreement is amended to the extent required to reflect the foregoing.

Please indicate your agreement with the foregoing by signing below and returning to my attention at your earliest convenience.

Sincerely,

/s/ Robert F. Friel

Robert F. Friel
Chairman and CEO
PerkinElmer, Inc.



Agreed and accepted this 19 th day of December, 2012.

/s/ E. Kevin Hrusovsky
E. Kevin Hrusovsky





Exhibit 10.36
PERKINELMER, INC.
SAVINGS PLAN
(Amended and Restated Effective January 1, 2012)







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TABLE OF CONTENTS
APPENDICES
ARTICLE I
DEFINITIONS
2

1.1
“Account
2

1.2
“Actual Deferral Percentage
2

1.3
“Adjustment Factor
2

1.4
“Administrator
2

1.5
“After-Tax Contribution Account
2

1.6
“After-Tax Contributions
2

1.7
“Annual Addition
2

1.8
“Authorized Leave of Absence
2

1.9
“Average Actual Deferral Percentage
2

1.10
“Average Contribution Percentage
2

1.11
“Before-Tax Contribution Account
2

1.12
“Before-Tax Contributions
2

1.13
“Beneficiary
3

1.14
“Board of Directors
3

1.15
“Code
3

1.16
“Committee
3

1.17
“Company
3

1.18
“Company Stock
3

1.19
“Company Stock Fund
3

1.20
“Compensation
3

1.21
“Computation Period
3

1.22
“Contribution Percentage
4

1.23
“Disability
4

1.24
“Early Retirement Date
4

1.25
“Effective Date
4

1.26
“Eligible Employee
4

1.27
“Employee
4

1.28
“Employer
4

1.29
“Employment Commencement Date
5

1.30
“Entry Date
5

1.31
“ERISA
5

1.32
“Excess Aggregate Contributions
5

1.33
“Excess Contributions
5

1.34
“Excess Deferrals
5

1.35
“Fund
5

1.36
“Hardship
5

1.37
“Highly Compensated Employee
6

1.38
“Hour of Service
6

1.39
“Limitation Year
7

1.40
“Matched Contributions
7

1.41
“Matching Contribution Account
7


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1.42
“Matching Contributions
7

1.43
“Nonhighly Compensated Employee
7

1.44
“Normal Retirement Age
7

1.45
“Normal Retirement Date
8

1.46
“One-Year Break in Service
8

1.47
“Participant
8

1.48
“Plan
8

1.49
“Plan Year
8

1.50
“Reemployment Commencement Date
8

1.51
“Regulations
8

1.52
“Rollover Account
8

1.53
“Rollover Contribution
8

1.54
“Severance from Employment
8

1.55
“Spouse
8

1.56
“Trust Agreement
8

1.57
“Trust Fund
8

1.58
“Trustee
8

1.59
“Unmatched Contributions
8

1.60
“Valuation Date
9

1.61
“Year of Service
9

 
 
 
ARTICLE II
ELIGIBILITY AND PARTICIPATION
9

2.1
Eligibility
9

2.2
Information
9

2.3
Eligibility upon Reemployment
10

2.4
Transferred Employees
10

 
 
 
ARTICLE III
CONTRIBUTIONS AND ALLOCATIONS
11

3.1
Before-Tax Contributions
11

3.2
After-Tax Contributions
12

3.3
Matching Contributions
12

3.4
Rollover Contributions
14

3.5
Changes in Contributions
14

3.6
Suspension and Resumption of Contributions
14

3.7
Actual Deferral Percentage Test
15

3.8
Reductions during Plan Year
16

3.9
Return of Excess Contributions after End of Plan Year
16

3.10
Distribution of Excess Deferrals
17

3.11
Contribution Percentage Test
18

3.12
Return of Excess Aggregate Contributions
19

3.13
Maximum Annual Additions
20

3.14
Return of Contributions to Employer
21

 
 
 
ARTICLE IV
ROTH ELECTIVE DEFERRALS
21

4.1
General Application
21

4.2
Separate Accounting
21


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4.3
Direct Rollovers
22

4.4
Correction of Excess Contributions
22

4.5
Definition of Roth Elective Deferrals
22

 
 
 
ARTICLE V
MAINTENANCE AND VALUATION OF ACCOUNTS
23

5.1
Maintenance of Accounts
23

5.2
Valuation of Accounts
23

5.3
Account Statements
23

 
 
 
ARTICLE VI
INVESTMENT OF CONTRIBUTIONS
23

6.1
Investment Funds
23

6.2
Investment of Participant’s Accounts
24

6.3
Responsibility for Investments
25

6.4
Changing Investment Elections - Future Contributions
25

6.5
Transfer among Funds
25

6.6
Special Rules Concerning the Company Stock Fund
25

 
 
 
ARTICLE VII
VESTING
26

7.1
Vesting in Before-Tax Contribution, After-Tax Contribution and Rollover
 
 
 Accounts
26

7.2
Vesting in Matching Contribution Account
27

7.3
Forfeiture of Nonvested Interest
27

7.4
Restoration of Forfeitures and Service
27

 
 
 
ARTICLE VIII
WITHDRAWALS AND LOANS DURING EMPLOYMENT
29

8.1
After-Tax Contribution Account Withdrawals
29

8.2
Rollover Contribution Account Withdrawal
29

8.3
Age 59½ Withdrawals
29

8.4
Age 70½ Withdrawals
29

8.5
Hardship Withdrawals
29

8.6
Loans to Participants
30

 
 
 
ARTICLE IX
DISTRIBUTIONS UPON SEVERANCE FROM EMPLOYMENT
33

9.1
Eligibility for Distribution
33

9.2
Form of Payment
33

9.3
Timing of Payment
33

9.4
Special Timing Rules
33

9.5
Proof of Death
33

9.6
Direct Rollovers
34

9.7
Minimum Required Distributions
35

 
 
 
ARTICLE X
TOP HEAVY PROVISIONS
39

10.1
When Applicable
39

10.2
Top Heavy Determination
39

10.3
Minimum Contribution
40

10.4
Vesting Rules
40


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10.5
Dual Plan Special Limitations
41

10.6
Aggregation Groups
41

10.7
Key Employee Defined
41

10.8
Determination Date Defined
42

10.9
Matching Contributions
42

10.10
Contributions under Other Plans
42

 
 
 
ARTICLE XI
ADMINISTRATION OF PLAN
42

11.1
Records and Notices
42

11.2
Powers and Duties
42

11.3
Claims Procedure
43

 
 
 
ARTICLE XII
MANAGEMENT OF FUNDS
44

12.1
Appointment of Trustee
44

12.2
Investment of Trust Fund by Trustees
44

12.3
Investment of Trust Fund by Investment Manager
45

12.4
Exclusive Benefit Rule
45

12.5
Medium of Distribution
45

 
 
 
ARTICLE XIII
AMENDMENT, MERGER, TERMINATION OF PLAN
46

13.1
Amendment of Plan
46

13.2
Merger or Consolidation
46

13.3
Additional Participating Employers
46

13.4
Termination of Plan
47

 
 
 
ARTICLE XIV
MISCELLANEOUS PROVISIONS
47

14.1
Limitation of Liability
47

14.2
Indemnification
47

14.3
Compliance with ERISA
48

14.4
Nonalienation of Benefits
48

14.5
Employment not Guaranteed by Plan
48

14.6
Form of Communication
48

14.7
Facility of Payment
48

14.8
Service in More Than One Fiduciary Capacity
49

14.9
Binding Effect of Company’s Actions
49

14.10
Governing Law
49

14.11
Military Service
49

 
 
 
APPENDIX A
ADDITIONAL RULES FOR PUERTO RICAN PARTICIPANTS
A-1

APPENDIX B
PREPARTICIPATION SERVICE
B-1

APPENDIX C
EFFECTIVE DATE OF ADOPTION OF 5% MATCHING
 
 
CONTRIBUTION
C-1

APPENDIX D
FLUID SCIENCES PARTICIPANTS
D-1

APPENDIX E
IDS PARTICIPANTS
E-1



iv

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PERKINELMER, INC.
SAVINGS PLAN
INTRODUCTION
PerkinElmer, Inc. (previously known as EG&G, Inc.) has adopted this amendment and restatement of the PerkinElmer, Inc. Savings Plan (the “Plan”) effective as of January 1, 2012. Prior to October 26, 1999, the Plan was known as the EG&G, Inc. Savings Plan. The Plan was last amended and restated effective as of January 1, 2007.
The Plan is intended to provide eligible participants with a convenient way to save on a regular and long-term basis, all as set forth herein and in the trust agreement adopted as a part of the Plan. The benefits provided to any individual under the Plan will depend upon the investment results achieved under such agreement and, accordingly, may vary with respect to each individual. The Plan is a profit-sharing plan which includes a cash or deferred arrangement and provides for employer matching contributions and employee after-tax contributions. It is intended that the Plan and trust shall at all times be qualified and tax-exempt within the meaning of Sections 401(a), 401(k), 401(m) and 501(a) of the Internal Revenue Code of 1986, as now in effect or hereafter amended, and any other applicable provisions of law.
Except as specified herein, the provisions of the Plan as contained herein shall apply only to those persons who are in the service of an Employer (as defined herein) on or after January 1, 2012. The rights and benefits, if any, of an Employee who terminated before January 1, 2012 shall be determined in accordance with the provisions of the Plan as in effect on the date his employment terminated.


1

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ARTICLE I
DEFINITIONS
When used herein the following terms shall have the following meanings:
1.1      “Account” means the account or accounts established and maintained in respect of a Participant pursuant to Section 5.1.
1.2      “Actual Deferral Percentage” means the ratio (expressed as a percentage) of the Before-Tax Contributions made on behalf of the Eligible Employee for the Plan Year to the Eligible Employee’s Compensation for the Plan Year.
1.3      “Adjustment Factor” means the cost of living adjustment factor prescribed by the Secretary of the Treasury under Section 415(d) of the Code, as applied to such items and in such manner as the Secretary shall provide.
1.4 “Administrator” means the Committee or its delegate.
1.5      “After-Tax Contribution Account” means the Account to which is credited a Participant’s After-Tax Contributions and earnings or losses on those contributions.
1.6      “After-Tax Contributions” means the amounts contributed by a Participant pursuant to Section 3.2.
1.7      “Annual Addition” means, for any Limitation Year, the sum of all contributions and forfeitures allocated to the Participant’s Accounts, other than his Rollover Account.
1.8      “Authorized Leave of Absence” means any leave of absence granted by an Employer under the Employer’s leave of absence policy, including a leave granted to an Employee who is absent from work due to either (a) the pregnancy of such Employee, (b) the birth of a child of the Employee, (c) the placement of a child in connection with the adoption of the child by the Employee, or (d) for purposes of caring for the child during the period immediately following the birth or placement for adoption.
1.9      “Average Actual Deferral Percentage” means the average (expressed as a percentage) of the Actual Deferral Percentages of the Eligible Employees in a group.
1.10      “Average Contribution Percentage” means the average (expressed as a percentage) of the Contribution Percentages of the Eligible Employees in a group.
1.11      “Before-Tax Contribution Account” means the Account to which is credited Before-Tax Contributions made on behalf of a Participant pursuant to Section 3.1 and earnings or losses on those contributions.
1.12      “Before-Tax Contributions” means the contributions made to the Plan by the Employer on behalf of a Participant who has elected to reduce his Compensation by a like amount pursuant to Section 3.1.

2

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1.13      “Beneficiary” means the beneficiary or beneficiaries designated pursuant to Section 2.2(c) to receive the amount, if any, payable under the Plan upon the death of a Participant.
1.14      “Board of Directors” means the board of directors of the Company.
1.15      “Code” means the Internal Revenue Code of 1986, as now in effect or hereafter amended. Reference to a Code Section shall include reference to any final Treasury regulations issued thereon.
1.16      “Committee” means the Administrative Committee of the Company consisting of the Company’s Senior Vice President Human Resources and such other individuals as he shall from time to time appoint.
1.17 “Company” means PerkinElmer, Inc. or any successor thereto.
1.18 “Company Stock” means common stock of the Company.
1.19      “Company Stock Fund” means an investment option that is a unique fund investing primarily in Company Stock.
1.20      “Compensation” means, for each part of a Plan Year that a Participant is eligible to make Before-Tax or After-Tax Contributions, base pay, overtime, shift differentials, commissions, other cash additives to base pay, incentive awards, bonuses and salary deferrals under any salary reduction agreement under Section 125 or 401(k) of the Code but excludes equity-related compensation, reimbursements or other expenses allowances, relocation allowances, per diem allowances, hardship allowances, foreign service premiums, cost-of-living allowances, deferred compensation, severance pay and other welfare benefits. For Plan Years beginning on or after January 1, 2001, Compensation shall include elective amounts that are not includible in the gross income of the Participant under Section 132(f) of the Code.
The annual Compensation of each Participant taken into account for all Plan purposes shall not exceed $200,000 as adjusted by the Secretary of the Treasury for increases in the cost of living in accordance with Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding twelve (12) months, over which Compensation is determined (the “determination period”) beginning in such calendar year. If a determination period consists of fewer than twelve (12) months, the limit referred to above will be multiplied by a fraction, the numerator of which is the number of months in the determination period and the denominator of which is 12.
For other specific purposes described in the Plan, “Compensation” shall have the meanings set forth in the respective provisions.
1.21      “Computation Period” means a 12-month period beginning on an Employee’s Employment Commencement Date or Reemployment Commencement Date, if applicable, and anniversaries thereof.

3

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1.22      “Contribution Percentage” means the ratio (expressed as a percentage) for each Eligible Employee of the sum of the After-Tax Contributions made by such Eligible Employee and Matching Contributions made under the Plan on behalf of the Eligible Employee for the Plan Year to the Eligible Employee’s Compensation for the Plan Year.
1.23      “Disability” means a Participant’s physical or mental condition, as determined by the Social Security Administration, that renders him eligible to receive disability benefits under Title II of the Social Security Act, as amended from time to time. The Administrator will apply the provisions of this Section 1.23 in a nondiscriminatory, consistent and uniform manner.
1.24      “Early Retirement Date” means the first day of any month which is not more than ten (10) years prior to a Participant’s Normal Retirement Date, which a Participant, who will then have completed at least ten (10) Years of Service, elects, on a form and in a manner prescribed by the Administrator, as a date on which he wishes to retire.
1.25      “Effective Date” means January 1, 2012, the date as of which this amendment and restatement of the Plan is effective except as otherwise specifically provided herein. The rights and benefits, if any, of each other Employee shall be determined in accordance with the respective provisions of the Plan in effect on the date such Employee terminated service.
1.26      “Eligible Employee” means any Employee of the Employer, other than: (a) a leased employee within the meaning of Section 414(n)(2) of the Code, (b) any person who is included in a unit of employees covered by an agreement recognized for purposes of collective bargaining with the Employer, provided retirement benefits have been the subject of good faith bargaining and such bargaining does not provide for coverage under the Plan, and (c) an Employee who is a nonresident alien deriving no earned income from the Employer which constitutes income from sources within the United States.
1.27      “Employee” means any person employed by the Employer, other than an independent contractor. Employee shall also include leased employees within the meaning of Section 414(n)(2) of the Code. Notwithstanding any other provision of the Plan, the term “Employee” shall not include any employee, independent contractor, leased employee or other individual unless such individual is contemporaneously treated by the Employer as an employee for purposes of the Plan (without regard to any subsequent recharacterization or inconsistent determination made by any person or entity or by any court, agency or other authority with respect to such individual whenever effective).
1.28      “Employer” means the Company and any subsidiary or affiliated organization of the Company that, with the approval of the Committee and subject to such considerations as the Committee may impose, adopts the Plan.
In determining Compensation for the purposes of determining who is a Highly Compensated Employee under Section 1.37, in determining a Participant’s Hours of Service, in determining whether an election to change the Limitation Year has been made in accordance with Section 1.39, in determining a Participant’s Severance from Employment under Section 1.54, in determining the limitation on Before-Tax Contributions under Section 3.1(b) in determining the Average Actual Deferral Percentages under Section 3.7 and the Average Contribution

4

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Percentages under Section 3.11, in determining the limitations on Annual Additions under Section 3.13 or period of absence for purposes of Section 7.4 and in determining whether the Plan is Top-Heavy under Article X, the term “Employer” shall include any other corporation or other business entity that must be aggregated with the Employer under Section 414(b), (c), (m) or (o) of the Code, but only for such periods of time when the Employer and such other corporation or other business entity must be aggregated as aforesaid. For purposes of Section 3.13, such definition of “Employer” shall be modified by Section 415(h) of the Code.
1.29      “Employment Commencement Date” means the date on which an Employee first performs an Hour of Service.
1.30 “Entry Date” means the first day of any month.
1.31      “ERISA” means the Employee Retirement Income Security Act of 1974, as now in effect or as hereafter amended.
1.32      “Excess Aggregate Contributions” means After-Tax Contributions and Matching Contributions in excess of the Contribution Percentage limit, as described in Section 401 (m)(6)(B) of the Code.
1.33      “Excess Contributions” means Before-Tax Contributions in excess of the Actual Deferral Percentage limit, as described in Section 401(k)(8)(B) of the Code.
1.34      “Excess Deferrals” means Before-Tax Contributions in excess of the limits imposed by Section 402(g) of the Code.
1.35      “Fund” or “Investment Fund” means the investment funds established under Article V, or any of them.
1.36      “Hardship” means an immediate and heavy financial need, as determined by the Administrator on a uniform and nondiscriminatory basis, that arises on account of (a) medical expenses described in Section 213(d) of the Code previously incurred by the Participant, his spouse, any dependents of the Participant (as defined in Section 152 of the Code without regard to Section 152(d)(1)(B) of the Code) or his Beneficiary or amounts necessary for these persons to obtain medical care described in Section 213(d) of the Code, (b) the purchase (excluding mortgage payments) of a principal residence for the Participant, (c) tuition expenses for the next twelve (12) month period of post-secondary education for the Participant, his spouse, any dependents of the Participant (as defined in Section 152 of the Code without regard to Section 152(d)(1)(B) of the Code) or his Beneficiary, (d) the need to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant’s principal residence, (e) payments for burial or funeral expenses for the Participant’s deceased parent, spouse, children or dependent (as defined in Section 152 of the Code without regard to Section 152(d)(1)(B) of the Code) or Beneficiary, or (f) expenses for the repair of damage to the Participant’s principal residence that would qualify for the casualty deduction under Section 165 of the Code (determined without regard to whether the loss exceeds 10% of adjusted gross income).

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1.37      “Highly Compensated Employee” means any Employee who performs services for the Employer during the determination year and who (a), during the look-back year, received Compensation from the Employer in excess of $100,000, multiplied by the Adjustment Factor, or (b) was a five percent (5%) Owner, as defined in Section 10.7, during the determination year or lookback year.
For purposes of this definition, the determination year is the Plan Year; the look-back year is the twelve (12) month period preceding the Plan Year. A highly compensated former Employee shall be treated as a Highly Compensated Employee if he separated from service (or is deemed to have separated) prior to the determination year, performs no service for the Employer during the determination year and was a highly compensated active Employee for either the separation year or any determination year ending on or after the Employee’s 55th birthday.
The determination of who is a Highly Compensated Employee, including the determination of the Compensation that is considered, will be made in accordance with Section 414(q) of the Code and the Regulations thereunder. For purposes of this Section 1.37, Compensation means compensation within the meaning of Section 415(c)(3) of the Code.
1.38 “Hour of Service” means, with respect to any applicable Computation Period:
(a)      each hour for which an Employee is directly or indirectly paid or entitled to payment for the performance of duties for the Employer;
(b)      each hour for which an Employee is directly or indirectly paid or entitled to payment by the Employer on account of a period during which no duties are performed, whether or not the employment relationship has terminated, due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence, but not more than 501 such hours on account of any single continuous period during which no duties are performed; and
(c)      each hour for which back pay, irrespective of mitigation of damages, has been awarded or agreed to by the Employer.
No hours shall be credited on account of any period during which an Employee performs no duties and receives payment solely for the purpose of reimbursement for medical or medically related expenses incurred by the Employee for the purpose of complying with applicable worker’s compensation, unemployment compensation or disability insurance laws.
If an Employee’s work records are not kept on an hourly basis, he shall be credited with 190 Hours of Service for each month in which he would have been credited with an Hour of Service.
Solely to the extent required by the Family and Medical Leave Act of 1993 (FMLA), an Employee shall be credited with Hours of Service while on a leave of absence protected under FMLA.

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The same Hours of Service shall not be credited under more than one of the above clauses (a), (b) or (c); and each hour credited to an Employee under clause (a), (b) or (c) above shall be credited in accordance with Section 2530.200b-2(b) and (c) of the U.S. Department of Labor’s Regulations, which hereby are incorporated by reference.
An Employee shall be considered as accruing Hours of Service in accordance with his normal work week for each week: (1) while on an Authorized Leave of Absence, if at or before the end of such leave, the Employee returns to service with the Employer, or (2) the Employee is laid off due to reduction in force if he returns to service with the Employer within one (1) year of the date the layoff began. An Employee who fails to return to service with the Employer at the end of an Authorized Leave of Absence or within one (1) year of a layoff due to reduction in force shall be deemed to have terminated service on the date the absence or layoff began and shall cease accruing Hours of Service as of the date the absence or the layoff began. An Employee who dies, incurs a Disability or retires on an Early Retirement Date or Normal Retirement Date while on an Authorized Leave of Absence shall, despite the foregoing, continue to accrue Hours of Service until his date of death, Disability or retirement, as the case may be.
1.39      “Limitation Year” means the calendar year, unless otherwise selected by the Employer in a manner consistent with that described in the Regulations issued pursuant to Section 415 of the Code.
1.40      “Matched Contributions” means a Before-Tax Contribution that is matched pursuant to Section 3.3(a) or (b) during a Plan Year.
1.41      “Matching Contribution Account” means the Account to which are credited any Matching Contributions made on behalf of the Participant and earnings or losses on those contributions.
1.42      “Matching Contributions” means the amounts contributed on behalf of a Participant pursuant to Section 3.3.
1.43      “Nonhighly Compensated Employee” means an Employee who is not a Highly Compensated Employee.
1.44      “Normal Retirement Age” means the date the Participant attains the age stated below based on his year of birth:
Age
Year of Birth
65
1937 and earlier
65 plus 2 months/year
1938 – 1942
66
1943 – 1954
66 plus 2 months/year
1955 – 1959
67
1960 and later


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1.45      “Normal Retirement Date” means the first day of the month following the date the Participant reaches Normal Retirement Age.
1.46      “One-Year Break in Service” means a Computation Period in which a Participant completes no more than 500 Hours of Service.
1.47      “Participant” means any Eligible Employee participating in the Plan as provided in Article II or any former Employee whose participation has not ceased pursuant to Section 2.7.
1.48      “Plan” means the PerkinElmer, Inc. Savings Plan, as set forth herein and as amended from time to time.
1.49      “Plan Year” means the twelve (12) month period commencing on each January 1st on or after the Effective Date and ending on the next following December 31st.
1.50      “Reemployment Commencement Date” means the first date following a One Year Break in Service on which the Employee again performs an Hour of Service.
1.51 “Regulations” means the Treasury regulations issued under the Code or any other applicable law by the Internal Revenue Service and any proposed or temporary regulations or rules pending the issuance of such regulations.
1.52      “Rollover Account” means the Participant’s Account to which is credited any Rollover Contribution made by the Participant and earnings or losses on that contribution.
1.53      “Rollover Contribution” means a contribution made by a Participant pursuant to Section 3.4.
1.54      “Severance from Employment” means the termination of the Employee’s employment relationship with the Employer, determined in accordance with Treasury Regulation Section 1.401(k)-1(d)(2).
1.55      “Spouse” means the person to whom a Participant is legally married on the earlier of (a) the date on which the Participant’s Account balances are distributed due to the Participant’s Severance from Employment, or (b) the Participant’s date of death.
1.56      “Trust Agreement” means the agreement entered into between the Company and the Trustee to carry out the purposes of the Plan.
1.57      “Trust Fund” means the assets of the Plan held in trust by the Trustee in accordance with the Trust Agreement.
1.58      “Trustee” means the trustee or trustees by whom the assets of the Plan are held in accordance with the Trust Agreement.
1.59      “Unmatched Contributions” means those Participant contributions which are not Matched Contributions, regardless of whether they are Before-Tax Contributions, After-Tax Contributions, a combination of both or made in a prior Plan Year.

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1.60 “Valuation Date” means any business day on which the New York Stock Exchange is open for and conducting business, or any more frequent date designated by the Administrator or the Trustee.
1.61      “Year of Service” means a Computation Period during which an individual completes at least 1,000 Hours of Service.
Wherever used herein, the singular includes the plural and the masculine includes the feminine, unless the context clearly requires otherwise.
ARTICLE II

ELIGIBILITY AND PARTICIPATION
2.1 Eligibility
(a)      Each Eligible Employee who was participating in the Plan on December 31, 2011 shall continue as a Participant on the Effective Date.
(b)      Effective January 1, 2012, each Eligible Employee not yet a Participant shall be eligible to become a Participant on any Entry Date on or after the date he first completes an Hour of Service for the Employer.
(c)      Notwithstanding the foregoing, no Eligible Employee who was an employee of Caliper Life Sciences, Inc. or its affiliates (“Caliper”) including prior to the acquisition of Caliper by the Company shall become a Participant prior to January 1, 2012.
2.2 Information
(a)      Each Eligible Employee who completes the requirements of Section 2.1 shall become a Participant as of any Entry Date following the date on which he becomes eligible for participation pursuant to Section 2.1 by making an election in accordance with procedures established and uniformly applied by the Administrator that:
(i)      indicates whether he is electing under Section 3.1 to have his Compensation reduced and, if appropriate, directs the Employer to contribute an equal amount to the Plan as Before-Tax Contributions and/or elects to make After-Tax Contributions pursuant to Section 3.2;
(ii)      authorizes the Employer to make regular payroll deductions;
(iii) makes an investment election; and
(iv) names a Beneficiary.
(b)      With respect to Employees hired on or after September 1, 2006, an Eligible Employee who does not, within 30 days after his or her Employment Commencement Date, either authorize his or her Participating Employer to make a Before-Tax Contribution on his or

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her behalf or notify the Committee that the Employee declines to authorize the making of a Before-Tax Contribution on his or her behalf, shall be deemed to have authorized his or her Employer to make a Before-Tax Contribution on his or behalf of 3% of his or her Compensation, beginning with the first payroll period that begins after the 30th day following the Participant’s Employment Commencement Date. Such Contribution shall continue until the Participant terminates employment with the Employer, or suspends or changes the Before-Tax Contribution in accordance with Section 3.5.
(c)      Each Participant may file a designation with the Administrator naming as Beneficiary a person, persons or entity to receive benefits payable upon his death. A Participant may at any time revoke or change his Beneficiary designation by filing a new designation with the Administrator. Any Beneficiary designation or revocation or change thereof naming as primary Beneficiary a person, persons or entity other than the Participant’s Spouse must be made with the written consent of the Participant’s Spouse acknowledging the effect of such designation, revocation or change and witnessed by a notary public. Written consent of the Participant’s Spouse shall not be required if it is established to the satisfaction of the Administrator that there is no Spouse, the Spouse cannot be located or under other circumstances as may be prescribed in Regulations. If the Participant is unmarried and fails to designate a Beneficiary or the Beneficiary does not survive the Participant, the benefits payable upon the death of the Participant will be paid to the Participant’s estate.
2.3 Eligibility upon Reemployment
Any person reemployed by an Employer as an Eligible Employee shall again be eligible to become a Participant as of his Reemployment Commencement Date.
2.4 Transferred Employees
(a)      A Participant who remains in the employ of the Employer but ceases to be an Eligible Employee shall continue to be a Participant and shall be credited with Hours of Service, but he shall not be eligible (i) to have Before-Tax Contributions made on his behalf, or (ii) to contribute After-Tax Contributions for as long as his employment status is other than that of an Eligible Employee. Any Compensation of such a Participant while he has an employment status other than that of an Eligible Employee shall be disregarded for all Plan purposes.
(b)      If an Employee transfers from an employment status with an Employer other than as an Eligible Employee and thereby becomes an Eligible Employee, he shall be eligible to become a Participant and have Before-Tax Contributions made on his behalf and contribute After-Tax Contributions as of the next following Entry Date.




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ARTICLE III

CONTRIBUTIONS AND ALLOCATIONS
3.1 Before-Tax Contributions
(a)      An Eligible Employee who meets the requirements of Section 2.1 may, by advance notice in accordance with procedures prescribed by the Administrator, elect to have his subsequent Compensation reduced by means of payroll deduction as of any Entry Date and to have an equal amount contributed to the Plan on his behalf as Before-Tax Contributions of up to 90% of his Compensation (minus any amount necessary to cover contributions for other benefit programs elected by the Employee, pay applicable employment or other payroll taxes or frequently required deductions such as child support). Such reduction amount shall be in one percent (1%) increments and shall be reduced by the amount of any After-Tax Contributions made on his behalf pursuant to Section 3.2. Such reduction shall commence effective with the first payroll period on or next following that Entry Date.
(b)      In no event will the Before-Tax Contributions made on behalf of a Participant for any calendar year exceed the dollar limitation contained in Section 402(g) of the Code, reduced by the amount of the Participant’s other before-tax contributions made through the Employer for the calendar year, except to the extent permitted under Section 3.1(e).
(c)      Before-Tax Contributions shall be deposited in the Plan by the Employer (whether or not the Employer has current profits or retained earnings) in a manner to be determined by the Administrator, but in any event such Before-Tax Contributions shall be paid to the Trustee on the earliest date on which the Before-Tax Contributions can reasonably be segregated from the Employer’s general assets.
(d)      If Before-Tax Contributions are returned to the Employer under Section 3.14, the elections to reduce Compensation that were made by Participants on whose behalf those contributions were made shall be void retroactively to the beginning of the period for which returned contributions were made.
(e)      All Employees who are eligible to make Before-Tax Contributions under the Plan and who have attained age 50 before the close of the Plan Year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Section 414(v) of the Code. Such catch-up contributions shall not be taken into account for purposes of the provisions of the Plan implementing the required limitations of Sections 401(g) and 415 of the Code. The Plan shall not be treated as failing to satisfy the provisions of the Plan implementing the requirements of Section 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416 of the Code, as applicable, by reason of the making of such catch-up contributions. The maximum amount of catch-up contributions that a catch-up eligible Participant may make during a Plan Year shall not exceed the limit described in Treasury Regulation Section 1.414(v)-1(c).
Matching Contributions described in Section 3.3 shall, in no event, be made on account of catch-up contributions.

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(f)      Except for occasional, bona fide administrative considerations, a Participant’s Before-Tax Contributions cannot precede the earlier of (1) the performance of services relating to the Before-Tax Contribution and (2) the date the Compensation subject to the Before-Tax Contribution would be available in the absence of an election to defer.
3.2 After-Tax Contributions
An Eligible Employee who meets the requirements of Section 2.1 may, by advance notice in accordance with procedures prescribed by the Administrator, elect to contribute to the Plan by means of payroll deduction as of any Entry Date After-Tax Contributions of up to sixteen percent (16%) of his Compensation, in one percent (1%) increments, reduced by the amount of any Before-Tax Contributions made on his behalf pursuant to Section 3.1.
3.3 Matching Contributions
(a) Generally .
(i)      The Employer shall make a Matching Contribution on behalf of each Participant equal to one hundred percent (100%) of the total Before-Tax and After-Tax contributions made by the Participant during the pay period not exceeding five percent (5%) of the Participant’s Compensation for the pay period. Matching Contributions under this paragraph (a) shall be transmitted to the Trustee within a reasonable time following the close of each pay period throughout the Plan Year.
(ii)      The Employer shall make an additional Matching Contribution on behalf of each Participant who is employed on December 1 of such Plan Year (or whose employment terminates during the Plan Year because of death, Disability, retirement on or after Normal Retirement Age or Retirement on an Early Retirement Date) so that such Participant receives a total Matching Contribution for the Plan Year equal to 100% of the total Before-Tax and After-Tax Contributions made by the Participant during the Plan Year not exceeding five percent (5%) of the Participant’s Compensation for the Plan Year. Matching Contributions under this paragraph (b) shall be transmitted to the Trustee within a reasonable time following the close of the Plan Year.
(iii)      In applying the provisions of paragraph (i) or (ii), Participant contributions shall be matched in the following order: (1) Before-Tax Contributions and (2) After-Tax Contributions.
(b) Certain OptoElectronics Employees .
[Intentionally omitted . See prior Plan and Appendix C for provisions governing certain OptoElectronics Employees and other sites or divisions of the Company prior to January 1, 2012.]
(c) Former Caliper Employees.

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(i)      Notwithstanding any other provision herein, the Matching Contribution on behalf of a Participant who was an employee of Caliper (as defined in Section 2.1(c)) immediately prior to the acquisition of Caliper by the Company (a “Caliper Participant”) shall be determined pursuant to this Section 3.3(c). The Employer shall make a Matching Contribution on behalf of each Caliper Participant equal to fifty percent (50%) of the total Before-Tax and After-Tax Contributions made by the Caliper Participant during the pay period not exceeding five percent (5%) of the Participant’s Compensation for the pay period. Matching Contributions under this paragraph (i) shall be transmitted to the Trustee within a reasonable time following the close of each pay period throughout the Plan Year.
(ii)      The Employer shall make an additional Matching Contribution on behalf of each Participant who is employed on December 1 of such Plan Year (or whose employment terminates during the Plan year because of death, Disability, retirement on or after the Normal Retirement Age or Retirement on an Early Retirement Date) so that such Participant receives a total Matching Contribution for the Plan Year equal to 50% of the total Before-Tax and After-Tax Contributions made by the Participant during the Plan Year not exceeding five percent (5%) of the Participant’s Compensation for the Plan Year. Matching Contributions under this paragraph (ii) shall be transmitted to the Trustee within a reasonable time following the close of the Plan Year.
(iii)      In applying the provisions of paragraph (i) or (ii), Participant contributions shall be matched in the following order: (1) Before-Tax Contributions and (2) After-Tax Contributions.
(iv) For periods commencing on or after January 1, 2013, this paragraph (c) shall have no effect, and Matching Contributions for all Participants shall be governed by Section 3.3(a).
(d)      Notwithstanding any other provisions of the Plan, the Employer may act to suspend, reduce or eliminate Matching Contributions. The Employer shall communicate any such action to all Participants for the applicable Plan Year to which the suspension, reduction or elimination first relates and may rescind such action at any time.
(e)      Matching Contributions described in this Section 3.3 shall be paid in cash to the Trustee as soon as administratively convenient following each Plan Year but in any event no later than the date required by applicable law in order to permit the Employer a deduction for such contributions for its taxable year.
(f)      For purposes of this Section 3.3, a Participant’s Before Tax Contributions do not include Before Tax Contributions that are Excess Deferrals or catch up contributions under Section 414(v) of the Code. For this purpose, Excess Deferrals relate first to Before Tax Contributions for the Plan Year not otherwise eligible for Matching Contributions.
(g)      Matching Contributions may not be made prior to (1) the date the Before Tax Contribution election is made; (2) the performance of services relating to the Before Tax

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Contributions (on which the Matching Contributions are made), or (3) the date the Before Tax Contributions are made.
3.4 Rollover Contributions
(a)      An Eligible Employee, whether or not a Participant, may, by notice received by the Administrator and under such terms and conditions as the Administrator shall determine, make a Rollover Contribution to the Plan and Trust Fund. The Administrator may require the Employee to submit such evidence and documentation as the Administrator determines necessary to be assured that the proposed contribution qualifies as a Rollover Contribution.
A Rollover Contribution is (i) a distribution of an “eligible rollover distribution” (as defined in Section 402(c)(4) of the Code) from an employee retirement plan qualified under Section 401(a) or 403(a) of the Code, including after-tax employee contributions, (ii) an annuity contract described in Section 403(b) of the Code excluding after-tax employee contributions, (iii) an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state, (iv) a distribution from an individual retirement account or individual retirement annuity described in Section 408 of the Code comprised solely of amounts attributable to a “rollover contribution” (as defined in Section 408(d)(3) of the Code) from an employee retirement plan qualified under Section 401(a) or 403(a) of the Code or (v) an amount transferred directly to the Trust Fund in a manner meeting the requirements of a direct transfer of an eligible rollover distribution pursuant to Section 401(a)(31) of the Code.
(b)      Unless otherwise determined by the Administrator, the amount to be accepted must be paid in cash or bank check.
(c) The amount received pursuant to this Section 3.4 shall be transferred to the Trust Fund and credited to a separate Rollover Account maintained by the Administrator for the Employee in accordance with Article V herein.
3.5 Changes in Contributions
The percentage of contributions designated by a Participant pursuant to Section 3.1 and/or Section 3.2 automatically shall apply to increases and decreases in his Compensation. A Participant may, in accordance with applicable administrative procedures, change the percentage of his Compensation to be contributed to the Plan as Before-Tax Contributions and/or After-Tax Contributions as of any Entry Date. Any such change shall be subject to the applicable provisions of Sections 3.1 and 3.2. The changed percentage shall remain in effect until subsequently changed.
3.6 Suspension and Resumption of Contributions
(a)      A Participant may, by giving advance notice in accordance with applicable administrative procedures, elect to suspend his Before-Tax Contributions and/or After-Tax Contributions as of any Entry Date. Such suspension shall commence effective with the first payroll period on or next following that Entry Date.

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(b)      Subject to Section 8.5, a Participant who has suspended his Before-Tax Contributions and/or After-Tax Contributions may, by giving advance notice in accordance with applicable administrative procedures, elect to resume contributions as of any Entry Date. Such resumption shall commence effective with the first payroll period on or next following that Entry Date.
3.7 Actual Deferral Percentage Test
(a)      For each Plan Year, the Average Actual Deferral Percentage for the group of all Highly Compensated Employees who are eligible to participate in the Plan must bear a relationship to the Average Actual Deferral Percentage for the group of all Nonhighly Compensated Employees who are eligible to participate in the Plan that satisfies at least one of the following tests:
(i) the Average Actual Deferral Percentage for said group of Highly Compensated Employees for that Plan Year shall not be more than the Average Actual Deferral Percentage for said group of Nonhighly Compensated Employees for that Plan Year multiplied by 1.25; or
(ii)      the Average Actual Deferral Percentage for said group of Highly Compensated Employees for that Plan Year shall not exceed 2 percentage points more than the Average Actual Deferral Percentage for said group of Nonhighly Compensated Employees for that Plan Year, and the Average Actual Deferral Percentage for said group of Highly Compensated Employees for that Plan Year shall not be more than the Average Actual Deferral Percentage for said group of Nonhighly Compensated Employees for that Plan Year multiplied by 2.
(b)      If Before-Tax Contributions are made to the Plan for a Plan Year for a Highly Compensated Employee who also is eligible to have salary reduction contributions allocated to his account under another plan maintained by the Employer that provides a cash or deferred arrangement described in Section 401(k) of the Code, the Actual Deferral Percentage for that Highly Compensated Employee shall be calculated as if all such other plans are part of the Plan. However, if a Highly Compensated Employee participates in two or more cash or deferred arrangements that are parts of plans that have different plan years, the cash or deferred arrangements shall be treated as a single arrangement with respect to the plan years ending with or within the same calendar year.
(c)      If the Plan satisfies the requirements of Sections 401(k), 401 (a)(4) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more plans satisfy the requirements of such sections of the Code only if aggregated with the Plan, this Section shall be applied by determining the Actual Deferral Percentages of Employees as if all such plans were a single plan. However, plans may be aggregated in order to satisfy Section 401(k) of the Code only if they have the same plan year.
(d)      For the purposes of satisfying the requirements of Sections 401(k), 401 (a)(4) or 410(b) of the Code, the Plan may be disaggregated into two or more plans or the Plan may be

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aggregated with one or more other plans, to the extent permitted by Sections 401(k), 401 (a)(4) and 410(b) of the Code and the Regulations thereunder.
(e) For purposes of determining the Actual Deferral Percentage, Before-Tax Contributions must be made before the last day of the twelve (12) consecutive month period immediately following the Plan Year to which those contributions relate.
3.8 Reductions during Plan Year
If, during the Plan Year, the Administrator determines that the Actual Deferral Percentage test provided in Section 3.7(a) is not met at the time of its review or would not be met if part or all of Before-Tax Contributions continue to be made on behalf of Participants who are Highly Compensated Employees, the Administrator, in its sole discretion, may reduce the rate (to zero (0) if necessary) of Before-Tax Contributions that would have been made during the remainder of the Plan Year for any Participant. To meet the Average Actual Deferral Percentage requirement of Section 3.7(a), any such decrease shall be applied first to Participants whose Actual Deferral Percentages represent the highest such Percentage, then in descending order to Participants whose Actual Deferral Percentages represent the next highest such Percentage, until the provisions of Section 3.7(a) are satisfied.
3.9 Return of Excess Contributions after End of Plan Year
(a)      If, after the last day of the Plan Year, the Administrator determines that the Average Actual Deferral Percentage requirements of Section 3.7(a) have not been satisfied, the Administrator, within 2½ months after the end of the Plan Year (but not later than the last day of the next Plan Year), shall distribute the Excess Contributions, adjusted for any income or loss, to all affected Participants who are Highly Compensated Employees. The Administrator shall calculate any Excess Contributions after determining the amount of Excess Deferrals pursuant to Section 3.1(b). The amount of Excess Contributions to be distributed shall be reduced by any Excess Deferrals previously distributed to the Participant for the tax year ending with or within the Plan Year. The amount of Excess Deferrals to be distributed for a tax year shall be reduced by any Excess Contributions previously distributed for the Plan Year beginning with or within the Participant’s tax year.
(b)      The income or loss allocable to Excess Contributions for the Plan Year shall be determined by multiplying the income or loss allocable to the Participant’s Before-Tax Contributions for the Plan Year by a fraction, the numerator of which is the Excess Contribution on behalf of the Participant for the Plan Year and the denominator of which is the Participant’s Account balance attributable to Before-Tax Contributions on the last day of the Plan Year, without regard to any income or loss during the Plan Year. No income or loss shall be attributable to the period between the end of the Plan Year and the date of the distribution.
(c)      The amount of Excess Contributions for Highly Compensated Employees shall be determined as provided in this paragraph. First, the Actual Deferral Percentage of the Highly Compensated Employee with the highest such Percentage will be reduced to the extent necessary to satisfy the Actual Deferral Percentage test or cause the percentage for that Highly

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Compensated Employee to equal the percentage for the Highly Compensated Employee with the next highest such Percentage. Second, this process will be repeated until the Actual Deferral Percentage test is satisfied. The total of such Excess Contributions shall then be distributed to Highly Compensated Employees in descending order commencing with the Highly Compensated Employee with the highest dollar amount of Before-Tax Contributions and other contributions to be distributed in order to satisfy the Actual Deferral Percentage test, consistent with the final regulations under Section 401(k) of the Code.
(d)      Excess Contributions distributed to Participants in accordance with this Section 3.9 shall be distributed in the following order: (i) from the Participant’s Before-Tax Contribution Account, to the extent such Contributions are not subject to Matching Contributions, and (ii) from the Participant’s Before-Tax Contribution Account, to the extent such Contributions are subject to Matching Contributions. If Excess Contributions are distributed to Participants in accordance with this Section 3.9, the Participant shall immediately forfeit all Matching Contributions that were made to match such distributed Excess Contributions.
(e)      Notwithstanding the foregoing, Excess Contributions will not be adjusted for income or loss from the period between the last day of the Plan Year and the date of distribution.
3.10 Distribution of Excess Deferrals
(a)      A Participant may state a claim for the return of Excess Deferrals and such Excess Deferrals, adjusted for any income or loss, shall be distributed if administratively practicable no later than the April 15th following the calendar year for which such allocable Excess Deferrals are made. The Participant’s claim shall be made in accordance with procedures established by the Administrator, shall be submitted to the Administrator no later than March 1st, shall specify the Participant’s Excess Deferrals for the preceding calendar year, and shall be accompanied by the Participant’s statement that such amounts, if not distributed, will constitute Excess Deferrals.
(b)      The income or loss allocable to Excess Deferrals for the Plan Year shall be determined by multiplying the income or loss allocable to the Participant’s Before-Tax Contributions for the Plan Year by a fraction, the numerator of which is the Excess Deferrals on behalf of the Participant for the Plan Year and the denominator of which is the Participant’s Account balance attributable to Before-Tax Contributions on the last day of the Plan Year, without regard to any income or loss during the Plan Year.
(c)      If Excess Deferrals have previously been distributed within the Plan Year, the Plan shall offset such distribution from the amount of the Participant’s Excess Contributions to be distributed for such Plan Year. In addition, the amount of Excess Deferrals that may be distributed for a Participant by the Plan for a Plan Year shall be reduced by the amount of Excess Contributions previously distributed.

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3.11 Contribution Percentage Test
(a)      For each Plan Year, the Average Contribution Percentage for the group of all Highly Compensated Employees who are eligible to participate in the Plan must bear a relationship to the Average Contribution Percentage for the group of all Nonhighly Compensated Employees who are eligible to participate in the Plan that satisfies at least one of the following tests:
(i)      The Average Contribution Percentage for said group of Highly Compensated Employees for that Plan Year shall not be more than the Average Contribution Percentage for said group of Nonhighly Compensated Employees for that Plan Year multiplied by 1.25; or
(ii)      The Average Contribution Percentage for said group of Highly Compensated Employees for that Plan Year shall not exceed 2 percentage points more than the Average Contribution Percentage for said group of Nonhighly Compensated Employees for that Plan Year, and the Average Contribution Percentage for said group of Highly Compensated Employees for that Plan Year shall not be more than the Average Contribution Percentage for said group of Nonhighly Compensated Employees for that Plan Year multiplied by 2.
(b)      If After-Tax Contributions and/or Matching Contributions are made to the Plan for a Plan Year for a Highly Compensated Employee who also is eligible to have after-tax contributions and/or matching contributions allocated to his account under another plan maintained by the Employer that is qualified under Section 401(a) of the Code, the Contribution Percentage for that Highly Compensated Employee shall be calculated as if all such other plans are part of the Plan. If a Highly Compensated Employee participates in two (2) or more plans that have different plan years, this Section 3.11(b) shall be applied by treating all plans that have plan years ending with or within the same calendar year as a single plan.
(c)      If the Plan satisfies the requirements of Sections 401(m), 401 (a)(4) and 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such sections of the Code only if aggregated with the Plan, this Section shall be applied by determining the Contribution Percentages of Employees as if all such plans were a single plan. However, plans may be aggregated in order to satisfy Section 401(m) of the Code only if they have the same plan years.
(d)      For the purposes of satisfying the requirements of Sections 401(m), 401 (a)(4) or 410(b) of the Code, the Plan may be disaggregated into two or more plans or the Plan may be aggregated with one or more other plans, to the extent permitted by Sections 401(m), 401(a)(4) and 410(b) of the Code and the Regulations thereunder.
(e)      For purposes of determining the Contribution Percentage, (i) After-Tax Contributions are considered to have been made in the Plan Year as of which they are contributed to the Trust Fund and (ii) Matching Contributions will be considered made for a Plan Year if made before the last day of the twelve (12) consecutive month period immediately following the Plan Year to which those contributions relate.

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3.12 Return of Excess Aggregate Contributions
(a)      If, after the last day of the Plan Year, the Administrator determines that the Average Contribution Percentage requirements of Section 3.11 (a) have not been satisfied, the Administrator, within 2½ months after the end of the Plan Year (but not later than the last day of the next Plan Year), shall first cause to be forfeited, if forfeitable, or if not forfeitable, distribute the Excess Aggregate Contributions, adjusted for any income or loss, to all affected Participants who are Highly Compensated Employees. The Administrator shall calculate any Excess Aggregate Contributions after determining the amount of Excess Deferrals pursuant to Section 3.1(b) and the amount of Excess Contributions pursuant to Section 3.9(a).
(b)      The income or loss allocable to Excess Aggregate Contributions for the Plan Year shall be determined by multiplying the income or loss allocable to Matching Contributions and After-Tax Contributions made on behalf of the Participant for the Plan Year by a fraction, the numerator of which is the Excess Aggregate Contribution on behalf of the Participant for the Plan Year and the denominator of which is the sum of the Participant’s Matching Contribution Account and After-Tax Contribution Account balances on the last day of the Plan Year, without regard to any income or loss during the Plan Year.
(c)      The amount of Excess Aggregate Contributions for Highly Compensated Employees shall be determined as provided in this Section 3.12(c). First, the Contribution Percentage of the Highly Compensated Employee with the highest such Percentage will be reduced to the extent necessary to satisfy the Contribution Percentage test or cause the percentage for that Highly Compensated Employee to equal the percentage for the Highly Compensated Employee with the next highest such Percentage. Second, this process will be repeated until the Contribution Percentage test is satisfied. The total of such Excess Aggregate Contributions to be distributed shall then be distributed to Highly Compensated Employees in descending order commencing with the Highly Compensated Employee with the highest dollar amount of Excess Aggregate Contributions and other contributions to be distributed in order to satisfy the Contribution Percentage test, consistent with the provisions of final regulations under Section 401(k) of the Code.
(d)      Excess Aggregate Contributions forfeited in accordance with this Section 3.12 shall be treated as Annual Additions under Section 3.13 and shall be applied to reduce subsequent Matching Contributions, as provided in Section 7.3.
(e)      Excess Aggregate Contributions distributed to Participants in accordance with this Section 3.12 shall be distributed in the following order: (i) from the Participant’s After-Tax Contribution Account and (ii) from the Participant’s Matching Contribution Account.
(f)      Notwithstanding the foregoing, Excess Aggregate Contributions will not be adjusted for income or loss from the period between the last day of the Plan Year and the date of distribution.

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3.13 Maximum Annual Additions
(a)      Except to the extent permitted under Section 3.1(e) of the Plan and Section 414(v) of the Code, the Annual Addition to a Participant’s Accounts for any Limitation Year, when added to the annual additions for such year under any other defined contribution plans maintained by the Employer, shall not exceed the lesser of:
(i)      $40,000 as adjusted for increases in the cost of living under Section 415(d) of the Code, or
(ii)      100 percent of the Participant’s 415 Compensation (as defined below) for the Limitation Year.
For purposes of this Section, the default rules of Section 415 of the Code and the Treasury Regulations thereunder are incorporated herein by this reference unless an optional rule is set forth in this Section or elsewhere in the Plan.
(b)      For purposes of this Section, “415 Compensation” means a Participant’s wages that are required to be reported as wages within the meaning of Section 3401(a) of the Code and all other payments of compensation to a Participant by the Employer (in the course of the Employer’s trade or business) for which the Employer is required to furnish the Participant a written statement under Sections 6041(d), 6051(a)(3), and 6052 of the Code (wages, tips and other compensation as reported on Form W-2) but determined without regard to any rules under Section 3401(a) of the Code that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Section 3401(a)(2) of the Code) and amounts paid or reimbursed by the Employer for moving expenses incurred by a Participant but only to the extent that at the time of payment it is reasonable to believe that such amounts are deductible by the Participant under Section 217 of the Code. For purposes of this Section:
(i)      415 Compensation shall include (1) amounts contributed by the Employer pursuant to a salary reduction agreement which are excludable from a Participant’s gross income under Sections 125, 402(e)(3), 402(h)(1)(B) and 403(b) of the Code and elective amounts that are not includible in the gross income of the Participant by reason of Section 132(f)(4) and (2) of the Code differential wage payments as defined in Section 414(u)(12) of the Code paid by the Employer to the extent such payments do not exceed the amounts the Participant would have received if he or she had continued to perform services for the Employer rather than entering qualified military service as defined in Section 414(u)(5) of the Code.
(ii)      415 Compensation shall exclude amounts paid by the Employer after Severance from Employment except for amounts that (1) represent payment for regular compensation for services during the Participant’s regular working hours, or compensation for services outside the Participant’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments that would have been paid to the Participant prior to his or her Severance from Employment, if the Participant had continued in employment with the Employer and (2) are paid by the end of the 2 1/2 month period following the

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Participant’s Severance from Employment or by the end of the Plan Year that includes the Participant’s Severance from Employment whichever is the latest to occur.
3.14 Return of Contributions to Employer
(a)      If all or part of the Employer’s contributions hereunder are conditioned upon their deductibility under Section 404 of the Code and the deduction for all or any part of such contributions to the Plan is disallowed by the Internal Revenue Service, the portion of the contributions to which such disallowance applies shall be returned to the Employer without interest, but reduced by any investment loss attributable to those contributions. The return shall be made as soon as practicable within one (1) year after the disallowance. All contributions to the Plan are conditioned on their deductibility.
(b)      If a contribution is made due to a mistake of fact, the Employer may require the Trustee to return the contribution, without interest but reduced by any investment loss allocable to the contribution. The return shall be made as soon as practicable within one (1) year after the date the contribution was made.
ARTICLE IV

ROTH ELECTIVE DEFERRALS
4.1 General Application
(a)      This article will apply to contributions beginning March 1, 2006.
(b)      As of March 1, 2006, the Plan will accept Roth elective deferrals made on behalf of Participants. A Participant’s Roth elective deferrals will be allocated to a separate account maintained for such deferrals as described in Section 4.2.
(c)      Unless specifically stated otherwise, Roth elective deferrals will be treated as Before-Tax Contributions for all purposes under the Plan.
4.2 Separate Accounting
(a)      Contributions and withdrawals of Roth elective deferrals will be credited and debited to the Roth elective deferral account maintained for each Participant.
(b)      The Plan will maintain a record of the amount of Roth elective deferrals in each Participant’s account.
(c)      Gains, losses, and other credits or charges must be separately allocated on a reasonable and consistent basis to each Participant’s Roth elective deferral account and the Participant’s other accounts under the Plan.
(d)      No contributions other than Roth elective deferrals and properly attributable earnings will be credited to each Participant’s Roth elective deferral account.

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4.3 Direct Rollovers
(a)      Notwithstanding Section 9.6, a direct rollover of a distribution from a Roth elective deferral account under the Plan will only be made to another Roth elective deferral account under an applicable retirement plan described in Section 402A(e)(1) of the Code or to a Roth IRA described in Section 408A of the Code, and only to the extent the rollover is permitted under the rules of Section 402(c) of the Code.
(b)      Notwithstanding Section 3.4, unless specifically stated otherwise, the Plan will accept a rollover contribution to a Roth elective deferral account only if it is a direct rollover from another Roth elective deferral account under an applicable retirement plan described in Section 402A(e)(1) of the Code and only to the extent the rollover is permitted under the rules of Section 402(c) of the Code.
(c)      The Plan will not provide for a direct rollover (including an automatic rollover) for distributions from a Participant’s Roth elective deferral account if the amount of the distributions that are eligible rollover distributions are reasonably expected to total less than $200 during a year. In addition, any distribution from a Participant’s Roth elective deferral account is not taken into account in determining whether distributions from a Participant’s other accounts are reasonably expected to total less than $200 during a year. However, eligible rollover distributions from a Participant’s Roth elective deferral account are taken into account in determining whether the total amount of the Participant’s account balances under the Plan exceeds $1,000 for purposes of mandatory distributions from the Plan.
(d)      The provisions of the Plan that allow a Participant to elect a direct rollover of only a portion of an eligible rollover distribution but only if the amount rolled over is at least $500 is applied by treating any amount distributed from the Participant’s Roth elective deferral account as a separate distribution from an amount distributed from the Participant’s other accounts in the Plan, even if the amounts are distributed at the same time.
4.4 Correction of Excess Contributions
(a)      In the case of a distribution of excess contributions as determined under the final regulations issued pursuant to Section 401(k) and Section 402A of the Code, a Highly Compensated Employee may designate the extent to which the excess amount is comprised of Before-Tax Contributions and Roth elective deferrals but only to the extent such types of deferrals were made for the year.
(b)      If the Highly Compensated Employee does not designate which type of elective deferrals are to be distributed, the Plan will distribute Before-Tax Contributions first.
(c)      Any excess contribution shall be treated as an Excess Contribution as described in Section 3.9 and distributed within 2 ½ months after the end of the Plan Year.
4.5 Definition of Roth Elective Deferrals
A Roth elective deferral is an elective deferral that is:

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(a)      Designated irrevocably by the Participant at the time of the cash or deferred election as a Roth elective deferral that is being made in lieu of all or a portion of the Before-Tax Contributions the Participant is otherwise eligible to make under the Plan; and
(b)      Treated by the employer as includible in the Participant’s income at the time the Participant would have received that amount in cash if the Participant had not made a cash or deferred election.
ARTICLE V

MAINTENANCE AND VALUATION OF ACCOUNTS
5.1 Maintenance of Accounts
The Administrator shall maintain for each Participant a separate Before-Tax Contribution Account, After-Tax Contribution Account, Matching Contribution Account, Rollover Account and any other accounts or subaccounts as the Administrator deems necessary or desirable.
5.2 Valuation of Accounts
As of each Valuation Date, the Administrator shall adjust the Accounts of each Participant to reflect contributions, withdrawals, distributions, income earned or accrued, expenses paid from the assets of the Plan and any increase or decrease in the fair market value of the assets of the Plan since the preceding Valuation Date; provided, however, that all such items shall be proportionally credited or debited, as applicable, based on the balances of each Participant’s Account as of the preceding Valuation Date, as adjusted to reflect the impact of any transactions during the period.
5.3 Account Statements
At least once a year, each Participant shall be furnished with a statement stating the dollar value of his Accounts and the vested portion of his Accounts.
ARTICLE VI

INVESTMENT OF CONTRIBUTIONS
6.1 Investment Funds
(a)      The Administrator from time to time shall direct the Trustee to establish and maintain one or more investment funds, hereinafter referred to as Funds, for the investment of assets of the Trust Fund. The number and type of Funds shall be determined by the Administrator, which may, in its discretion, direct the Trustee to establish and maintain one or more additional Funds or to delete one or more existing Funds. Such funds shall include a Company Stock Fund.
(b)      Pending the investment of any amounts in a Fund, the Trustee may invest assets of the Trust Fund temporarily in a qualified default investment alternative as defined in

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regulations issued by the Department of Labor. The Trustee may keep such amounts of cash as it, in its sole discretion, shall deem necessary or advisable as part of such Funds, all within the limitations specified in the Trust Agreement.
(c)      All interest, dividends and proceeds from the disposition of and other income received with respect to assets held with respect to each of the Funds shall be reinvested in the respective Fund and all expenses of the Trust that are properly allocable to a particular Fund shall be so allocated and charged.
6.2 Investment of Participant’s Accounts
(a)      A Participant may, in accordance with applicable administrative procedures, specify the percentages of the Before-Tax Contributions, After-Tax Contributions, Matching Contributions, and Rollover Contributions made by or on behalf of the Participant that shall be invested in each Fund maintained under the Plan.
(b)      If an investment fund is closed, the Participant shall redirect the investment of amounts held in a closing investment fund to a new or remaining investment fund. If a Participant does not provide timely affirmative investment instructions, the Administrator may establish procedures in accordance with section 404(c)(4) of ERISA under which amounts invested in a closing investment fund shall be transferred to a new or remaining investment fund. Such procedures shall be subject to the following:
(i)      Amounts invested in a closing investment fund shall be transferred to a new or remaining investment fund with the characteristics, including characteristics relating to risk and rate of return, that are reasonably similar to the characteristics of the closing investment fund; and
(ii)      At least 30 days and no more than 60 days prior to the effective date of the change, Participants shall be provided with written notice of the change and information comparing the existing funds and the new or remaining investment fund to which amounts invested in the closing investment fund will be transferred (in the absence of affirmative investment instructions from the Participant to the contrary).
(c)      If a Participant fails to direct the investment of his Account, it shall be invested in an investment fund selected by the Administrator until superseded by a subsequent election by the Participant. It is intended that the investment fund selected by the Administrator shall be a “qualified default investment alternative” as described in Section 404(c)(5) of ERISA and Department of Labor Regulations issued thereunder. Participants on whose behalf an investment in the default investment fund may be made shall be notified at least 30 days in advance of the first such investment and shall be notified at least 30 days in advance of each subsequent Plan Year. Any material relating to the Participant’s investment in the default investment fund (e.g., account statements, prospectuses) shall be provided to such Participants.

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6.3 Responsibility for Investments
Each Participant is solely responsible for the selection of his investment options. Participants shall exercise such responsibility in a manner intended to relieve Plan fiduciaries from liability for investments in accordance with Section 404(c) of ERISA. The Trustee, the Administrator, the Employer and the officers, supervisors and other employees of the Employer are not empowered to advise a Participant as to the manner in which his Accounts shall be invested. The fact that a particular Fund is available to Participants for investment under the Plan shall not be construed as a recommendation for investment in that Fund. The Employer shall be the named fiduciary for the purposes of carrying out the Participant’s investment instructions.
6.4 Changing Investment Elections - Future Contributions
A Participant may, in accordance with applicable administrative procedures, change his investment election as to subsequent contributions, subject to the limitations of Section 6.2, as of any Valuation Date.
6.5 Transfer among Funds
A Participant may, in accordance with applicable administrative procedures, elect to transfer all or a portion of the balance in all of his Accounts between and among Funds as of any Valuation Date.
6.6 Special Rules Concerning the Company Stock Fund
Consistent with the terms of the Trust Agreement, the following rules shall apply to the Company Stock Fund:
(a)      Voting . Voting, tender and similar rights with respect to Company Stock shall be passed through by the Trustee to Participants and Beneficiaries with accounts holding such securities. If the Trustee does not receive instructions with respect to shares, or if the Plan holds unallocated shares, the Trustee shall act with respect to those shares in the same proportion as the shares for which the Trustee has received instruction.
(b)      Confidentiality . The Trustee shall employ procedures to ensure that information relating to the purchase, holding, and sale of Company Stock and the exercise of voting, tender and similar rights with respect to Company Stock by Participants and Beneficiaries is maintained in accordance with procedures which are designed to safeguard the confidentiality of such information, except to the extent necessary to comply with applicable law. The Administrator shall be responsible for ensuring that such procedures are sufficient to safeguard Participant confidentiality, such procedures are being followed, and that an independent fiduciary, such as the Trustee, is appointed under the circumstances described in Department of Labor Regulation section 2550.404c-1(d)(2)(ii)(E)(4)(ix).
(c)      Transfers/Restrictions . Transactions in Company Stock may be subject to such procedures or restrictions as the Company or the Administrator deem appropriate to comply

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with federal or state securities law consistent with Section 401(a)(35)(D)(ii)(II) of the Code. Otherwise, a Participant may direct the Administrator to transfer all or a portion of the Participant’s Account balance invested in Company Stock into other Funds in accordance with Section 6.5.
(d)      Construction . It is intended that transactions in the Company Stock Fund will be described in ERISA Section 404(c).
(e)      Compliance with Section 401(a)(35) of the Code . The Company Stock Fund shall comply with the requirements of Section 401(a)(35) of the Code. The diversification requirements shall apply as follows:
(i)      With respect to a Participant (including for this section an alternate payee who has an account under the Plan or a deceased Participant’s beneficiary), if any portion of the Participant’s account attributable to elective deferrals (as described in Section 402(g)(3)(A) of the Code), employee contributions or rollover contributions is invested in publicly traded employer securities, then the Participant must be offered the opportunity to elect to divest those employer securities and reinvest an equivalent amount in other investment options available under the Plan.
(ii) With respect to a Participant who has completed at least three Years of Service (including for purposes of this section an alternate payee who has an account under the Plan with respect to such Participant or a deceased Participant’s beneficiary), if a portion of the Participant’s account attributable to employer nonelective contributions is invested in publicly traded employer securities, the Participant must be offered the opportunity to elect to divest those employer securities and reinvest an equivalent amount in other investment options available under the Plan.
(iii)      At least three investment options (other than employer securities) must be offered to Participants described in (i) and (ii) above. Each investment option must be diversified and have materially different risk and return characteristics. Periodic reasonable divestment and reinvestment opportunities must be provided at least quarterly. Except as provided in Sections 1.401(a)(35-1(e)(2) and (3) of the Treasury Regulations, restrictions (either direct or indirect) or conditions will not be imposed on the investment of publicly traded employer securities if such restrictions or conditions are not imposed on the investment of other plan assets.
ARTICLE VII

VESTING
7.1      Vesting in Before-Tax Contribution, After-Tax Contribution and Rollover Accounts
A Participant shall at all times have a one hundred percent (100%) nonforfeitable vested right to the value of his Before-Tax Contribution Account, After-Tax Contribution Account and Rollover Account.

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7.2 Vesting in Matching Contribution Account
(a)      A Participant receiving Matching Contributions described in Section 3.3(a) or (c) shall have a one hundred percent (100%) nonforfeitable right to that portion of his Matching Contribution Account attributable to such contributions.
(b)      A Participant who prior to January 1, 2012 received Matching Contributions described in Section 3.3(b) of the prior Plan shall have a nonforfeitable right to that portion of his Matching Contribution Account attributable to such contributions in accordance with the following schedule:
Years of Service
Vested Percentage
Less than 3
0
3 or more
100

(c)      Notwithstanding the provisions of (b) above, a Participant shall have a one hundred percent (100%) nonforfeitable vested right to the value of his Matching Contribution Account upon the occurrence of any of the following events prior to his Severance from Employment: (i) Normal Retirement Age, (ii) Disability, (iii) death, or (iv) in accordance with Section 13.4.
7.3 Forfeiture of Nonvested Interest
Upon a Participant’s Severance from Employment, the nonvested portion of a Participant’s Matching Contribution Account shall be forfeited at the earlier of the date he receives a distribution of the vested portion of his Account balance or the date he incurs five consecutive One-Year Breaks in Service or a one-year period of absence described in Section 7.4(a), whichever is applicable. The Administrator shall apply all forfeitures (i) by restoring the amount of previous forfeitures, in accordance with Section 7.4(b) or (c), (ii) by reducing the amount of Matching Contributions required under the Plan for the then current Plan Year and allocating such forfeitures in a manner consistent with Section 3.3(a), or using them to pay reasonable administrative expenses of the Plan.
7.4 Restoration of Forfeitures and Service
(a)      If a former Participant whose Severance from Employment resulted in a forfeiture of the entire portion of his Account balance pursuant to Section 7.3 resumes participation in the Plan after at least five (5) consecutive One-Year Breaks in Service (with respect to Matching Contributions), he shall have no right to restoration of any previously forfeited portion of his Account. Such Participant’s Years of Service or period of employment after the Break in Service or period of absence shall not be taken into account in determining the Participant’s vested nonforfeitable right to the value of his Matching Contribution Account

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attributable to Matching Contributions made by the Employer before he resumed participation in the Plan.
(b)      If a former Participant (i) whose Severance from Employment resulted in a forfeiture of less than the entire portion of his Account balance pursuant to Section 7.3 did not receive a distribution pursuant to Section 9.3 and resumes employment as an Eligible Employee or (ii) whose Severance from Employment resulted in a forfeiture of the entire portion of his Account balance pursuant to Section 7.3 resumes employment as an Eligible Employee, in either case prior to incurring five (5) consecutive One-Year Breaks in Service or a one-year period of absence, whichever is applicable, the previously forfeited portion of his Account shall be restored upon his Reemployment Commencement Date. Such Participant’s Years of Service or period of employment before and after the Break in Service shall be taken into account in determining the Participant’s vested nonforfeitable right to the value of his Matching Contribution Account.
(c)      If a former Participant whose Severance from Employment resulted in a forfeiture of less than the entire portion of his Account balance pursuant to Section 7.3 received a distribution pursuant to Section 9.3 and resumes employment as an Eligible Employee prior to incurring five (5) consecutive One-Year Breaks in Service, the previously forfeited portion of his Account shall be restored upon the date on which the Participant repays in cash to the Plan the full amount of the distribution, in accordance with applicable administrative procedures. Such repayment must be made prior to the end of the five-year period commencing on the Participant’s Reemployment Commencement Date. Such Participant’s Years of Service before and after the Break in Service shall be taken into account in determining the Participant’s vested nonforfeitable right to the value of his Matching Contribution Account.
(d)      Notwithstanding any provision herein to the contrary, if a distribution is made at a time when a Participant has less than a one hundred percent (100%) nonforfeitable vested right to the value of his Matching Contribution Account and may increase his vested percentage in such Account after the distribution,
(i)      a separate account will be established for the Participant’s interest in the Plan as of the time of the distribution, and
(ii)      at any relevant time the Participant’s nonforfeitable portion of the separate account will be equal to an amount (“X”) determined by the formula:
X = P(AB + (R x D)) - (R x D)
For purposes of applying the formula: P is the nonforfeitable percentage at the relevant time, AB is the account balance at the relevant time, D is the amount of the distribution and R is the ratio of the account balance at the relevant time to the account balance after distribution.

ARTICLE VIII
WITHDRAWALS AND LOANS DURING EMPLOYMENT

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8.1 After-Tax Contribution Account Withdrawals
A Participant may, in accordance with applicable administrative procedures, elect to withdraw all or a portion of his After-Tax Contribution Account from the Plan at any time. Any withdrawal made pursuant to this Section 8.1 shall be taken, to the extent available, prorata from the Investment Funds in the order established by the Administrator.
8.2 Rollover Contribution Account Withdrawal
A Participant may, in accordance with applicable administrative procedures, request a withdrawal of all or a portion of his Rollover Account, determined as of the Valuation Date coinciding with or immediately following receipt of such request. Any withdrawal made pursuant to this Section 8.2 shall be taken, to the extent available, pro rata from the Investment Funds.
8.3 Age 59½ Withdrawals
(a)      A Participant who has attained age 59½ and withdrawn all of his After-Tax Contribution Account pursuant to Section 8.1 above may, in accordance with applicable administrative procedures, request a withdrawal of all or a portion of his Before-Tax Contribution Account, determined as of the Valuation Date coinciding with or immediately following receipt of such request. Any withdrawal made pursuant to this Section 8.3(a) shall be taken, to the extent available, prorata from the Investment Funds in the order established by the Administrator.
(b)      A Participant who has attained age 59½ and has a one hundred percent (100%) nonforfeitable vested right to the value of his Matching Contribution Account may request a withdrawal of the entire portion of his individual Account, determined as of the Valuation Date coinciding with or immediately following receipt of such request. Any withdrawal made pursuant to this Section 8.3(b) shall be taken, to the extent available, prorata from the Funds and shall be subject to the provisions of Sections 8.1 and 8.3(a) above.
8.4 Age 70½ Withdrawals
A Participant who has attained age 70½ and withdrawn all of his After-Tax Contribution Account pursuant to Section 8.1 may, in accordance with applicable administrative procedures, withdraw all or any portion of the balance of his Account determined as of the Valuation Date coinciding with or immediately following receipt of such request. Such a withdrawal shall be subject to the foregoing provisions of this Article VIII but shall not be subject to the withdrawal penalty provisions of Section 8.3. Partial withdrawals are permitted under this Section 8.4. Any withdrawal made pursuant to this Section 8.4 shall be taken, to the extent available, prorata from the Funds.
8.5 Hardship Withdrawals
(a)      A Participant who has suffered a Hardship may request a withdrawal of all or any portion of the value of his Before-Tax Contribution Account (excluding all earnings comprising part of such Account that were credited after 1988) determined as of the Valuation

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Date coinciding with or immediately following receipt of such request. The request must be made in accordance with procedures prescribed by the Administrator.
(b)      Before requesting a withdrawal pursuant to this Section 8.5, a Participant must first obtain all distributions, other than hardship distributions, and all nontaxable loans currently available to him under all qualified plans maintained by the Employer.
(c)      The amount of any Hardship withdrawal shall not exceed the amount required to meet the immediate and heavy financial need created by the hardship, including the amount necessary to pay any income taxes and related penalties resulting from the distribution. The determination of the existence of the financial need and the amount necessary to meet that need shall be made by the Administrator in accordance with objective standards on a uniform and nondiscriminatory basis.
(d)      A Participant who obtains a Hardship withdrawal pursuant to this Section 8.5 shall be prohibited from making Before-Tax Contributions and After-Tax Contributions to the Plan and to all other plans maintained by the Employer for six (6) months from the date of the withdrawal
(e)      Any Hardship withdrawal made pursuant to this Section 8.5 shall be taken, to the extent available, prorata from the Funds in the order described in Section 8.3(a). All withdrawal payments shall be made in a lump sum in cash as soon as practicable after the Administrator makes its determination.
8.6 Loans to Participants
(a)      Loans . The Administrator or its delegate may, in accordance with a uniform and nondiscriminatory policy, direct the Trustee to loan a Participant amounts from the vested portion of his Accounts. All loans shall be in accordance with the terms, conditions, requirements and limitations specified in this Section 8.6 and any separate written document adopted by the Administrator and forming part of the Plan. It is intended that all loans made to Participants under this Section 8.6 shall meet the requirements of Section 72(p) of the Code.
(b)      Loan Administration . The loan provision of the Plan shall be administered by the Administrator, which shall establish the terms and conditions generally applicable to loans made under the Plan. The Administrator is authorized to delegate to the Trustee the authority to review loan requests, execute loan agreements and collect loan payments.
In administering the loan provisions of this Section 8.6, the Administrator shall:
(i)      adopt such rules and regulations as it deems necessary for the proper and efficient administration of loans, including, but not limited to, appropriate adjustments in the accounting provisions of the Plan as it deems necessary and advisable to facilitate and account for loans;
(ii)      establish standards that shall be used to determine if a loan request should be approved;

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(iii)      determine how the interest rate to be charged on outstanding loans is to be calculated and when the rate to be charged for new loans is to be changed;
(iv)      determine, from time to time, the minimum loan amount;
(v)      employ agents, attorneys, accountants, and other persons to administer the loan provision and to collect outstanding loans; and
(vi)      take all other actions necessary or advisable to carry out the provisions of this Section 8.6.
(c)      Loan Eligibility . Any Participant who is either (i) an Employee paid on the payroll system of the Employer or (ii) a former employee who is a party in interest as defined in Section 3(14) of ERISA with respect to the Plan may request a loan subject to the terms, conditions and limitations prescribed in this Section 8.6.
(d)      Loan Request . Each loan request must be made in accordance with procedures prescribed by the Administrator. Two loans may be granted concurrently and/or may be outstanding at any one time if one loan is a principal residence loan, which is a loan used to acquire a dwelling that within a reasonable period of time is to be used (determined at the time the loan is to be made) as the principal residence of the Participant.
(e)      Term of Loan and Payment . The Administrator or its delegate shall review each loan request and decide whether or not it shall be approved. The decision of the Administrator or its delegate regarding the approval of the loan request shall be final and binding on all parties. Each loan shall be evidenced by a promissory note executed by the borrowing Participant in a form approved by the Administrator and shall provide for payment of principal and interest based on substantially level amortization payments. All loans shall be subject to a specific repayment schedule with payments to be made not less frequently than quarterly over the term of the loan. The period of repayment for any loan shall in no event exceed sixty (60) months; provided, however, that the 60-month repayment period restriction shall not apply to any principal residence loan as defined in Section 8.6(d). The Administrator or its delegate shall have discretion to determine when and under what circumstances a principal residence loan shall be made and the loan repayment period for such loans.
A loan to a Participant shall be secured by the Participant’s Account. Loan payments shall be required to be made through payroll deductions, and all Participants shall be required to execute an irrevocable authorization directing the Employer to deduct the loan payments from the Participant’s wages or salary, which amounts shall be transmitted to the Trustee and applied against the outstanding loan balance. Effective as of April 1, 2000, a Participant who terminated with an outstanding loan balance shall be permitted to continue to make loan repayments other than through payroll deduction by personal check or cash in accordance with the repayment schedule set forth in the promissory note. Participants may prepay the entire amount of the remaining unpaid principal balance (and all remaining interest due thereon) at any time without penalty.

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(f)      Maximum Loan . Loans to a Participant (when added to the outstanding balance of all other loans from the Plan and any other qualified plan maintained by the Employer) shall not be in an amount that exceeds the lesser of:
(i)      $50,000, reduced by the excess (if any) of the highest outstanding balance of loans from the Plan during the one-year period ending on the day before the date on which such loan is made, over the outstanding balance of other loans from the Plan on the date the new loan is made, or
(ii)      fifty percent (50%) of the vested portion of the Participant’s Account reduced by the then outstanding balance of any other loans that the Participant received from the Plan.
The Administrator shall also establish guidelines relating to the ability of the Participant to repay the loan, which shall determine the maximum amount of any loan which can be made to any Participant.
(g)      Interest . Each loan shall bear interest at a rate to be fixed by the Administrator and, in determining the interest rate, the Administrator shall take into consideration interest rates currently being charged by commercial lending institutions. Interest rates shall be fixed for the terms of the loan at the time the loan is made, and the Administrator shall determine periodically the interest rate to be charged on new loans.
(h)      Failure to Repay Loans . The Administrator shall establish uniform rules to apply where a Participant fails to repay any portion of a loan made to him and accrued interest thereon in accordance with the terms of the loan, or where any portion of a loan and accrued interest thereon remains unpaid on a Participant’s Severance from Employment, if the Participant elects not to continue repayments on a non-payroll deduction basis as permitted by Section 8.6(e). Such rules shall not be inconsistent with Section 72(p) of the Code and Regulations thereunder. Loan repayments with respect to qualified military service will be suspended as permitted under Sections 414(u)(4) and 72(p) of the Code.
Notwithstanding the foregoing provisions of this Section 8.6(h), if a Participant loan remains unpaid at the time that a distribution is due the Participant (or his Beneficiary) under the Plan, the Administrator shall reduce the amount otherwise distributable to the Participant or Beneficiary by the unpaid balance of principal and accrued interest on the Participant’s loan and distribute (in kind) the promissory note or other agreement evidencing such loan in full or partial satisfaction of the obligation to distribute the Participant’s vested Account.
(i)      Directed Investment . Any loan to a Participant under this Section 8.6 shall be made prorata from the Investment Funds in which the Participant’s individual Account is invested, shall be charged against said Account and shall be treated as a segregated investment of the Participant’s Account. Any principal and interest paid on the loan shall be paid prorata to the Investment Funds in which are invested the Participant’s Accounts from which the loan was taken, in the same proportions as the amounts taken from those Accounts. Loan repayments

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shall be applied first to satisfy accrued loan interest and the remainder shall be applied to principal.
ARTICLE IX

DISTRIBUTIONS UPON SEVERANCE FROM EMPLOYMENT
9.1 Eligibility for Distribution
A Participant’s vested Account shall become payable upon Severance from Employment due to death, Disability, attainment of Normal Retirement Age or other termination of employment.
A Participant’s Before-Tax Contributions, qualified nonelective contributions, qualified matching contributions and earnings attributable to these contributions shall be distributed on account of the Participant’s Severance from Employment.
9.2 Form of Payment
Benefits shall be paid in a single lump sum payment.
9.3 Timing of Payment
Benefits that become payable in accordance with Section 9.1 shall be distributed as soon as administratively feasible after the Participant or the Beneficiary, as the case may be, elects, in accordance with procedures established by the Administrator, to receive a distribution.
If the vested value of a Participant’s Account is $1,000 or less at the time benefits become distributable in accordance with Section 9.1, the Participant or Beneficiary, as the case may be, shall be required to receive a distribution of the balance in a single lump sum as soon as administratively practicable.
9.4 Special Timing Rules
Unless a Participant elects otherwise, his vested Account shall be distributed to him no later than sixty (60) days after the close of the Plan Year in which occurs the latest of his Normal Retirement Age, the tenth (10th) anniversary of the year in which he commenced participation in the Plan or the date of his Severance from Employment. The failure of a Participant to consent to a distribution while his benefit is immediately distributable within the meaning of Section 411(a)(11) of the Code shall be deemed to be an election to defer commencement of payment of any benefit sufficient to satisfy this Section 9.4.
9.5 Proof of Death
The Administrator may require and rely upon such proof of death and such evidence of the right of any Beneficiary or other person to receive the value of the Accounts of a deceased Participant as the Administrator may deem proper, and its determination of death and of the right of that Beneficiary or other person to receive payment shall be conclusive.
9.6 Direct Rollovers

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(a)      In General . Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee’s election under this Section 9.6, a Distributee may elect, at the time and in the manner prescribed by the Administrator, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. Notwithstanding the foregoing, the amount to be distributed in a direct rollover to a Distributee who is not the must be paid in a direct trustee-to-trustee transfer to an individual retirement plan described in Section 402(c)(8)(B)(i) or (ii) of the Code that is established for the purposes of receiving the distribution on behalf of the nonspousal beneficiary.
(b)      Eligible Rollover Distribution . An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (no less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee’s designated beneficiary, or for a specified period of ten years of more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; the portion of any distribution that is not includible in gross income; any hardship distribution. A portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of After Tax employee contributions or Roth contributions which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in Section 408(a) or (b) of the Code, a qualified defined benefit or defined contribution plan described in Section 401(a) or 403(a) of the Code, or an annuity contract described in Section 403(b) of the Code that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.
(c)      Eligible Retirement Plan . An Eligible Retirement Plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, a qualified trust described in Section 401 (a) of the Code, that accepts the Distributee’s Eligible Rollover Distribution, an annuity contract described in Section 403(b) of the Code and an eligible Plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state or any agency or instrumentality of a state or political subdivision of a state which agrees to separately account for such amounts transferred into the plan from the Plan, or to a Roth IRA described in Section 408A(b) of the Code. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order as defined in Section 414(p) of the Code.
(d)      Distributee . A Distributee includes an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving Spouse and the Employee’s or former Employee’s Spouse or former Spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are Distributees with regard to the interest of the Spouse or former Spouse.

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(e)      Direct Rollover . A Direct Rollover is a payment by the Plan to the Eligible Retirement Plan specified by the Distributee.
(f)      Nonspousal Rollovers . Effective for distributions on and after January 1, 2008, a distribute who is a designated beneficiary (as defined in Section 401(a)(9)(E) of the Code) of a deceased Participant and who is not the deceased Participant’s surviving Spouse (a “nonspousal beneficiary”) may elect, at the time and in the manner prescribed by the Administrator, to have any amount payable to him or her paid directly in a direct rollover. The amount to be distributed in the direct rollover must satisfy all of the requirement to be an eligible rollover distribution other than the requirement that the distribution be made to the Participant or the Participant’s Spouse and must be paid in a direct trustee-to-trustee transfer to an individual retirement plan described in Section 402(c)(8)(B)(i) or (ii) of the Code that is established for the purposes of receiving the distribution on behalf of the nonspousal beneficiary.
9.7 Minimum Required Distributions
The requirements of this Section shall take precedence over any inconsistent provisions of this Plan. Distributions in all cases will be made in accordance with Section 401(a)(9) of the Code and the regulations promulgated thereunder.
(a) Time and Manner of Distribution .
(i)      Required Beginning Date. The participant’s entire interest shall be distributed, or begin to be distributed, to the Participant no later than the Participant’s Required Beginning Date.
(ii)      Death of Participant before Distributions Begin. If the Participant dies before distributions begin, the Participant’s entire interest shall be distributed, or begin to be distributed, no later than as follows:
(A)      If the participant’s surviving Spouse is the Participant’s sole designated beneficiary, then distributions to the surviving Spouse shall begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70½, if later.
(B)      If the participant’s surviving Spouse is not the Participant’s sole designated beneficiary, then distributions to the designated beneficiary shall begin by December 31 of the calendar year immediately following the calendar year in which the Participant died.
(C)      If there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, the Participant’s entire interest shall be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.
(D)      If the Participant’s surviving Spouse is the Participant’s sole designated beneficiary and the surviving Spouse dies after the Participant but before distributions

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to the surviving Spouse begin, this subsection (a)(ii), other than subsection (a)(ii)(A), will apply as if the surviving Spouse were the Participant.
For purposes of subsections (a)(ii) and (c), unless subsection (a)(ii)(D) applies, distributions are considered to begin on the Participant’s Required Beginning Date. If subsection (a)(ii)(D) applies, distributions are considered to begin on the date distributions are required to begin to the surviving Spouse under subsection (a)(ii)(A). If distributions under an annuity purchased from an insurance company irrevocably commence to the Participant before the Participant’s Required Beginning Date (or to the Participant’s surviving Spouse before the date distributions are required to begin to the surviving Spouse under subsection (a)(ii)(A), the date distributions are considered to begin is the date distributions actually commence.
(iii)      Forms of Distribution. Unless the Participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the Required Beginning Date, as of the first distribution calendar year distributions shall be made in accordance with subsections (b) and (c) of this Section. If the Participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Section 401(a)(9) of the Code and the Treasury Regulations.
(b)      Required Minimum Distributions during Participant’s Lifetime .
(i)      Amount of Required Minimum Distribution for Each Distribution Calendar Year. During the Participant’s lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of:
(A)      the quotient obtained by dividing the Participant’s account balance by the distribution period in the Uniform Lifetime Table set forth in Treasury Regulation Section 1.401(a)(9)-9, using the Participant’s age as of the Participant’s birthday in the distribution calendar year; or
(B)      if the Participant’s sole designated beneficiary for the distribution calendar year is the Participant’s Spouse, the quotient obtained by dividing the Participant’s account balance by the number in the Joint and Last Survivor Table set forth in Treasury Regulation Section 1.401(a)(9)-9, using the Participant’s and Spouse’s attained ages as of the Participant’s and Spouse’s birthdays in the distribution calendar year.
(ii)      Lifetime Required Minimum Distribution through Year of Participant’s Death. Required minimum distributions will be determined under this subsection (b) beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the Participant’s date of death.
(c) Required Minimum Distributions after Participant’s Death .
(i) Death on or after Date Distributions Begin

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(A)      Participant Survived by Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is a designated Beneficiary, the minimum amount that will be distributed for each distribution calendar year after year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the longer of the remaining life expectancy of the Participant or the remaining life expectancy of the Participant’s designated beneficiary, determined as follows:
(1)      The Participant’s remaining life expectancy is calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.
(2)      If the Participant’s surviving Spouse is the Participant’s sole designated beneficiary, the remaining life expectancy of the surviving Spouse is calculated for each distribution calendar year after the year of the Participant’s death using the surviving Spouse’s age as of the Spouse’s birthday in that year. For distribution calendar years after the year of the surviving Spouse’s death, the remaining life expectancy of the surviving Spouse is calculated using the age of the surviving Spouse as of the Spouse’s birthday in the calendar year of the Spouse’s death, reduced by one for each subsequent calendar year.
(3) If the Participant’s surviving Spouse is not the Participant’s sole designated beneficiary, the designated beneficiary’s remaining life expectancy is calculated using the age of the Beneficiary in the year following the year of the Participant’s death, reduced by one for each subsequent year.
(B)      No Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is no designated beneficiary as of September 30 of the year after the year of the Participant’s death, the minimum amount that shall be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the Participant’s remaining life expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.
(ii) Death before Date Distributions Begin
(A)      Participant Survived by Designated Beneficiary. If the Participant dies before the date distributions begin and there is a designated beneficiary, the minimum amount that shall be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the remaining life expectancy of the Participant’s designated beneficiary, determined as provided in subsection (c)(i).
(B)      No Designated Beneficiary. If the Participant dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of the Participant’s entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

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(C)      Death of Surviving Spouse before Distributions to Surviving Spouse are Required to Begin. If the Participant dies before the date distributions begin, the Participant’s surviving Spouse is the Participant’s sole designated beneficiary, and the surviving Spouse dies before distributions are required to begin to the surviving Spouse under subsection (a)(ii)(A), this subsection (c)(ii) shall apply as if the surviving Spouse were the Participant.
(d) Definitions .
(i)      Designated Beneficiary. The individual who is designated as the Beneficiary under the Plan and is the designated Beneficiary under Section 401(a)(9) of the Code and Treasury Regulation Section 1.401(a)(9)-1, Q&A-4.
(ii)      Distribution Calendar Year. A calendar year for which a minimum distribution is required. For distributions beginning before the Participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant’s Required Beginning Date. For distributions beginning after the Participant’s death, the first distribution calendar year is the calendar year in which distributions are required to begin under subsection (a)(ii). The required minimum distribution for the Participant’s first distribution calendar year shall be made on or before the Participant’s Required Beginning Date. The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the Participant’s Required Beginning Date occurs, will be made on or before December 31 of that distribution calendar year.
(iii)      Life Expectancy. Life expectancy as computed by use of the Single Life Table in Treasury Regulation Section 1.401(a)(9)-9.
(iv)      Participant’s Account Balance. The Participant’s account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the Participant’s account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The Participant’s account balance for the valuation calendar year includes any amounts rolled over or transferred to the Plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year.
(v)      Required Beginning Date. The required beginning date of a Participant is April 1 following the calendar year in which the Participant attains age 70½ or if later, April 1 following the calendar year in which the Participant retires (except that benefit distributions to a 5 percent owner must commence by the April 1 of the calendar year following the calendar year in which the Participant attains age 70½).
(e)      Election to Apply 5-Year Rule to Distributions to Designated Beneficiaries . If the Participant dies before distributions begin and there is a designated beneficiary, distribution to the designated beneficiary is not required to begin by the date specified in (a)(ii), but the Participant’s entire interest will be distributed to the designated beneficiary by December 31 of

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the calendar year containing the fifth anniversary of the Participant’s death. If the Participant’s surviving Spouse is the Participant’s sole designated beneficiary and the surviving Spouse dies after the Participant but before distributions to either the Participant or the surviving Spouse begin, this election will apply as if the surviving Spouse were the Participant. The election will apply to all distributions.
(f)      Notwithstanding the foregoing, a Participant or Beneficiary who would have been required to receive required minimum distributions for 2009 but for the enactment of Section 401(a)(9)(H) of the Code (“2009 RMDs”), and who would have satisfied that requirement by receiving distributions that are equal to the 2009 RMDs will not receive those distributions for 2009 unless the Participant or Beneficiary chooses to receive such distributions. Participants and Beneficiaries described in the preceding sentence will be given the opportunity to elect to receive the distributions described in the preceding sentence. In addition, notwithstanding Section 9.6 of the Plan, and solely for purposes of applying the direct rollover provisions of the Plan 2009 RMDs will be treated as eligible rollover distributions.
ARTICLE X
TOP HEAVY PROVISIONS
10.1 When Applicable
If the Plan is determined to be “Top Heavy” for any Plan Year, the provisions of this Article shall supersede any conflicting provisions of the Plan.
10.2 Top Heavy Determination
(a)      The Plan shall be Top Heavy with respect to any Plan Year in which, as of the “Determination Date”, the ratio of the present value of accrued benefits under all defined benefit plans in the “Aggregation Group” for “Key Employees” plus all account balances attributable to Employer and Employee contributions (except as otherwise noted below) under the Plan and all other defined contribution plans in the Aggregation Group, exceeds 60 percent of such present value of accrued benefits and such account balances for all Key Employees and Non-Key Employees under all plans in the Aggregation Group. If any individual has not performed services for any Employer maintaining the Plan at any time during the five (5) year period ending on the Determination Date, his accrued benefits and account balances shall not be taken into account to determine whether the Plan is Top Heavy. The accrued benefits and account balances of any individual who is not a Key Employee but who was a Key Employee in a prior year will be disregarded. In any event, the calculation of the Top Heavy ratio and the extent to which distributions, tax deductible qualified employee contributions, rollovers and transfers are taken into account shall be in accordance with Section 416 of the Code and Regulations thereunder. When aggregating plans, accrued benefits and account balances under other plans will be calculated as of determination dates that are within the same calendar year.
(b)      Distributions during year ending on the Determination Date. The present values of accrued benefits and the amounts of account balances of an Employee as of the Determination Date shall be increased by the distributions made with respect to the Employee under the Plan and any plan aggregated with the Plan under Section 416(g)(2) of the Code during the 1-year period ending on the determination date. The preceding sentence shall also apply to

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distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Section 416(g)(2)(A)(i) of the Code. In the case of a distribution made for a reason other than Severance from Employment, death, or disability, this provision shall be applied by substituting 5-year period for 1-year period.
(c)      Employees not performing services during year ending on the determination date. The accrued benefits and accounts for any individual who has not performed services for the Employer during the 1-year period ending on the determination date shall not be taken into account.
10.3 Minimum Contribution
For each year that the Plan is Top Heavy the Employer shall contribute to the Plan and allocate to the Matching Contribution Account of each Non-Key Employee (including such an individual who is eligible to participate but has not elected to do so in accordance with Article II) an amount that is not less in total than the lesser of three percent (3%) of the Non-Key Employee’s Compensation for the Plan Year or the greatest amount (expressed as a percentage of the Compensation) allocated to the Account of any Key Employee for that year. This minimum allocation shall be made even though, under other Plan provisions, the Eligible Employee would not otherwise be entitled to receive an allocation or would have received a lesser allocation for the year because of (i) his failure to be employed on a specified date such as the last day of the Plan Year, (ii) his failure to make mandatory contributions, if any, to the Plan, or (iii) his Compensation being less than a stated amount. This requirement shall not apply to the extent the Participant is covered under any plan or plans of the Employer and such Employer has provided that the minimum benefit or minimum allocation requirements applicable to Top Heavy Plans will be satisfied in the other plan or plans.
10.4 Vesting Rules
For any Plan Year in which the Plan is Top Heavy, the minimum vesting schedule described in Section 10.5 will apply to the Plan in lieu of the schedule provided in Section 7.2. The minimum vesting schedule applies to all accrued benefits within the meaning of Section 411(a)(7) of the Code, including benefits accrued before the Plan became Top Heavy. Further, no reduction in vested benefits may occur in the event the Plan’s status as Top Heavy changes for any Plan Year. However, this Section does not apply to the Account balance of any Employee who does not complete any Years of Service after the Plan has initially become Top Heavy and such Employee’s Account balance will be determined without regard to this Section.
If the minimum vesting schedule shall apply, the nonforfeitable interest of such Participant in his Account balance attributable to Matching Contributions shall be determined on the basis of the following if such nonforfeitable interest is greater than that determined under Section 7.2:

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Years of Service
Vested Percentage
Less than 2
0
2 but less than 3
20
3 but less than 4
40
4 but less than 5
60
5 but less than 6
80
6 or more
100
10.5 Dual Plan Special Limitations
If a Key Employee participates in both the Plan and a defined benefit plan maintained by the Employer, then for all years that the Plan and the defined benefit plan are Top Heavy and the Top Heavy ratio referred to in Section 10.7(b) does not exceed 90 percent, the minimum benefit described in Section 416(h)(2)(A) of the Code shall be provided under the defined benefit plan for each Non-Key Employee.
10.6 Aggregation Groups
(a)      Aggregation Group means a required or permissive aggregation group. The required aggregation group consists of each plan of the Employer in which a Key Employee is a participant and each other plan of the Employer which enables any plan of such Employer to meet the nondiscrimination requirements of Section 401(a)(4) of the Code. The Employer may permit any plan not required to be included in an Aggregation Group as being part of such group if such group would continue to meet the Section of the Code requirements previously set forth.
(b)      Each plan of the Employer required to be included in an Aggregation Group shall be treated as a Top Heavy Plan if such group is a Top Heavy group. A required aggregation will be considered a Top Heavy group if the present value of the cumulative accrued benefits for Key Employees under all defined benefit plans included in such group and the aggregate of the accounts of Key Employees under all defined contribution plans included in such group exceed sixty percent (60%) of a similar sum determined for all Employees.
10.7 Key Employee Defined
Key Employee means any Employee or former Employee (including any deceased Employee) who at any time during the Plan Year that includes the determination date was an officer of the Employer having annual compensation greater than $145,000 (as adjusted under Section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002), a 5-percent owner of the Employer, or a 1-percent owner of the Employer having annual compensation of more than $150,000. For this purpose, annual compensation means compensation within the meaning of Section 415(c)(3) of the Code. The determination of who is a Key Employee will be made in accordance with Section 416(i)(1) of the Code and the applicable regulations and other guidance of general applicability.
10.8 Determination Date Defined
Determination Date means with respect to the initial Plan Year, the last day of the first Plan Year and, for each other Plan Year, the last day of the preceding Plan Year.

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10.9 Matching Contributions
Matching Contributions described in Section 3.3 of the Plan shall be taken into account for purposes of satisfying the minimum contribution requirements of Section 416(c)(2) of the Code and the Plan. The preceding sentence shall apply with respect to Matching Contributions under the Plan or, if the Plan provides that the minimum contribution requirement shall be met in another plan, such other plan. Matching Contributions that are used to satisfy the minimum contribution requirements shall be treated as Matching Contributions for purposes of the actual contribution percentage test and other requirements of Section 401(m) of the Code.
10.10 Contributions under Other Plans
The minimum benefit requirement shall be met as to non-Key Employees who participate in the Plan and in the PerkinElmer, Inc. Employees Retirement Plan by providing the minimum benefit required by Section 416 of the Code to such non-Key Employees under the PerkinElmer, Inc. Employees Retirement Plan.
ARTICLE XI

ADMINISTRATION OF PLAN
11.1 Records and Notices
The Administrator shall keep a record of all its proceedings and acts with respect to its administration of the Plan and shall maintain all such books of accounts, records and other data as may be necessary for the proper administration of the Plan. The Administrator shall have the discretionary authority to interpret the provisions of the Plan and Trust Agreement. The Administrator shall notify the Trustees of any action taken by the Administrator affecting the Trustees and its obligations or rights regarding the Plan and, when required, shall notify any other interested person or persons.
11.2 Powers and Duties
The Administrator has the following powers and duties:
(a)      To determine the rights of eligibility of an Employee to participate in the Plan, the value of a Participant’s Account and the nonforfeitable percentage of each Participant’s Account;
(b)      To adopt rules of procedure and regulations necessary for the proper and efficient administration of the Plan provided the rules are not inconsistent with the terms of the Plan;
(c)      To construe and enforce the terms of the Plan and the rules and regulations it adopts, including interpretation of the Plan documents and documents related to the Plan’s operation;

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(d)      To direct the Trustee as respects the crediting and distribution of the Trust Fund;
(e)      To review and render decisions respecting a claim for (or denial of a claim for) a benefit under the Plan;
(f)      To furnish the Employer with information which the Employer may require for tax or other purposes;
(g)      To engage the service of agents whom it may deem advisable to assist it with the performance of its duties;
(h)      To engage the services of an Investment Manager or Managers, as defined in Section 12.3, each of whom will have power and authority to manage, acquire or dispose (or direct the Trustee with respect to acquisition or disposition) of any Plan asset under its control; and
(i)      To establish, in its sole discretion, a nondiscriminatory policy which the Trustee must observe in making loans, if any, to Participants and Beneficiaries.
All rules, procedures and decisions of the Administrator shall be uniformly and consistently applied to all Participants in similar circumstances. Such rules, procedures and decisions so made shall be conclusive and binding on all persons having an interest in the Plan.
11.3 Claims Procedure
The Office of the Senior Vice President Human Resources (the “Claims Administrator”) shall make all initial determinations as to the right of any person to a benefit. If any application for payment of a benefit under the Plan shall be denied, the Claims Administrator shall notify the claimant within ninety (90) days of such application setting forth the specific reasons therefore and shall afford such claimant a reasonable opportunity for a full and fair review of the decision denying his or her claim. If special circumstances require an extension of time for processing the claim, the claimant will be furnished with a written notice of the extension prior to the termination of the initial ninety (90) day period. In no event shall such extension exceed a period of ninety (90) days from the end of such initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Claims Administrator expects to render its decision. The Claims Administrator may delegate initial determinations as to the right of any person to a benefit to a member of his or her staff.
The notice of the initial denial shall set forth, in addition to the specific reasons for the denial, the following:
(a) reference to pertinent provisions of the Plan;
(b)      such additional information as may be relevant to the denial of the claim;
(c)      an explanation of the claims review procedure; and

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(d)      notice that such claimant may request the opportunity to review pertinent Plan documents and submit a statement of issues and comments.
Within sixty (60) days following notice of denial of his or her claim, upon written request made by any claimant for a review of such denial to the Senior Vice President Human Resources (or such other member of the Administrative Committee designated by him or her to hear the appeal), the Senior Vice President Human Resources shall take appropriate steps to review the denial in light of any further information or comments submitted by such claimant.
The Senior Vice President Human Resources shall render a decision within sixty (60) days after the claimant’s request for review and shall advise said claimant in writing of the decision on such review, specifying reasons and identifying appropriate provisions of the Plan. If special circumstances require an extension of time for processing, a decision will be rendered as soon as possible, but not later than one hundred twenty (120) days after receipt of a request for the review. If the extension of time for review is required because of special circumstances, written notice of the extension shall be furnished to the claimant prior to the commencement of the extension. If the decision is not furnished within such time, the claim shall be deemed denied on review. The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant without legal counsel, as well as specific references to the pertinent Plan provisions on which the decision is based.
ARTICLE XII

MANAGEMENT OF FUNDS
12.1 Appointment of Trustee
The Company shall appoint one or more Trustees to receive and hold in trust all contributions paid into the Trust Fund. Such Trustee or Trustees shall serve at the pleasure of the Company and shall have such rights, powers and duties as the Company shall from time to time determine including but not limited to those stated below.
12.2 Investment of Trust Fund by Trustees
All contributions made to the Trust Fund pursuant to the Plan shall be paid to the Trustees and, except as herein otherwise provided, shall be held, invested and reinvested by the Trustees without distinction between principal and income in such securities or such other property, real or personal, wherever situated, as the Trustees shall deem advisable, including, but not limited to, shares of stock, common or preferred, whether or not listed on any exchange, participations in mutual investment funds, bonds and mortgages, and other evidences of indebtedness or ownership, or in loans to Participants (consistent with other provisions hereof), and participations in any common trust fund established or maintained by the Trustees for the collective investment of fiduciary funds and shall not be limited by any state statute or judicial decision prescribing or limiting investments appropriate for trustees. The Trustees shall hold and retain all the property and assets of the Trust Fund including income from investments and from all other sources, for the exclusive benefit of the Participants and their Beneficiaries, as provided herein, and for paying the costs and expenses of administering the Plan or Trust Fund, to the extent that the same are not paid by any Employer.

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12.3 Investment of Trust Fund by Investment Manager
The Company may enter into one or more agreements for the appointment of one or more Investment Managers to supervise and direct all the investment and reinvestment of a portion or all of the Trust Fund in accordance with the provisions of the Plan in the same manner and with the same powers, duties, obligations, responsibilities and limitations as apply to the Trustees. As a condition to its appointment, an Investment Manager shall acknowledge in writing that it is a fiduciary with respect to the Trust Fund. An Investment Manager so appointed shall be an investment advisor registered under the Investment Advisors Act of 1940, a bank as defined in such Act or an insurance company that is qualified to manage the assets of employee benefit plans pursuant to the laws of more than one state. The Trustees shall be bound by the supervision and direction of the Investment Manager, unless and until the Company amends or revokes the appointment or authority of the Investment Manager.
The Company may furnish an Investment Manager with written investment guidelines for investment of the Trust Fund assets, which guidelines may include directions with respect to diversification of the investments. Any Investment Manager shall receive such reasonable compensation chargeable against the Trust Fund or payable by each Employer as shall be agreed upon by the Company. The Company may revoke any agreement with the Investment Manager at any time by thirty (30) days’ written notice to the Investment Manager. Any Investment Manager may resign by thirty (30) days’ written notice to the Committee.
12.4 Exclusive Benefit Rule
Except as otherwise provided in the Plan, no part of the corpus or income of the assets of the Plan shall be used for, or diverted to, purposes other than for the exclusive benefit of Participants and other persons entitled to benefits under the Plan. No person shall have any interest in or right to any part of the earnings of the assets of the Plan, or any right in, or to, any part of the assets held under the Plan, except as and to the extent expressly provided in the Plan.
12.5 Medium of Distribution
The Trustee shall cause all distributions to be made in cash. Notwithstanding the foregoing, if a Participant or Beneficiary whose Account is invested in Company Stock so elects in the manner prescribed by the Administrator, distribution of all or part of such interest shall be made in shares of Company Stock (with fractional shares paid in cash). The preceding sentence shall not apply in the case of hardship withdrawals pursuant to Section 8.5.
ARTICLE XIII

AMENDMENT, MERGER, TERMINATION OF PLAN
13.1 Amendment of Plan
The Company (for itself and other Employers) shall have the right at any time to amend the Plan, and retroactively if deemed necessary or appropriate, by written instrument approved by the Committee, except that no such amendment shall make it possible for any part of the

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assets of the Plan to be used for, or diverted to, purposes other than for the exclusive benefit of persons entitled to benefits under the Plan; provided, however, that an amendment that is expected to have a significant cost impact (including, without limitation, an amendment to merge or terminate the Plan) as determined by the Committee whose determination will be final and binding, must be approved by the Board of the Company; and provided further that the Senior Vice President Human Resources may approve any amendment necessary to comply with the Code, ERISA or other applicable laws and regulations. No amendment shall be made which has the effect of decreasing the balance of the Accounts of any Participant or of reducing the nonforfeitable percentage computed under the Plan as in effect on the date on which the amendment is adopted or, if later, the date on which the amendment becomes effective.
13.2 Merger or Consolidation
The Plan may not be merged or consolidated with, and its assets or liabilities may not be transferred to, any other plan unless each person entitled to benefits under the Plan would, if the resulting plan were then terminated, receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation, or transfer if the Plan had then terminated.
13.3 Additional Participating Employers
(a)      If any company is or becomes a subsidiary of or associated with the Company, the Committee may include any employees of that subsidiary or associated company in the participation of the Plan upon appropriate action by that company necessary to adopt the Plan. In that event, or if any persons become Employees of an Employer as the result of merger or consolidation or acquisition of all or part of the assets or business of another company or for purposes of a specific assignment at a specific location, the Committee shall determine to what extent, if any, previous service with the subsidiary, associated or other company or at the specific location shall be recognized under the Plan, but subject to the continued qualification and tax-exempt status of the Plan and trust, respectively, under the Code.
(b)      Any Employer may terminate its participation in and withdraw from the Plan upon appropriate action by its board of directors. In that event, the assets of the Plan held on account of Participants in the employ of that Employer, and any unpaid balances of the Accounts of all Participants who have separated from the employ of that Employer, shall be determined by the Administrator. Those funds shall be distributed as provided in Section 13.4 if the Plan should be terminated with respect to the Employer, or shall be segregated by the Trustee as a separate trust, pursuant to certification to the Trustee by the Administrator, continuing the Plan as a separate plan for the Employees of that Employer under which the board of directors of that Employer shall succeed to all the powers and duties of the Board of Directors, including the appointment of an administrator for such separate plan. Except as required by applicable law, the withdrawal of an Employer from the Plan shall not constitute a partial or complete termination of the Plan as thereafter in effect with respect to any other Employer.
13.4 Termination of Plan

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(a)      The Board of Directors may terminate the Plan or completely discontinue contributions under the Plan for any reason at any time. In the case of the termination or partial termination of the Plan, or of the complete discontinuance of Employer contributions to the Plan, affected Participants shall be one hundred percent (100%) vested in and have a nonforfeitable right to the total amount in all of their Accounts under the Plan as of the date of the termination or discontinuance. The total amount in each Participant’s Accounts shall be distributed, as the Administrator shall direct, to him or for his benefit or continued in trust for his benefit.
(b)      The Plan will be deemed terminated (i) if and when the Company is judicially declared bankrupt or executes a general assignment to or for the benefit of its creditors, (ii) if and when the Company is a party to a merger in which it is not the surviving organization unless the surviving organization adopts the Plan within sixty (60) days after the merger, or (iii) upon dissolution of the Company.
ARTICLE XIV

MISCELLANEOUS PROVISIONS
14.1 Limitation of Liability
Neither the Company, any Employer, the Board of Directors, the Committee, the Administrator, nor any of their respective directors, officers and employees, shall incur any liability for any act or failure to act unless such act or failure to act constitutes a lack of good faith, willful misconduct or gross negligence in relation to the Plan or the Trust Fund.
14.2 Indemnification
To the extent that the Administrator, or directors, officers and employees of the Company or of a participating Employer who act as or on behalf of the Administrator or otherwise as plan fiduciaries, are not protected and held harmless by or through insurance, the Company indemnifies and saves harmless the Administrator and any director, officer or employee of the Company or of a participating Employer who acts on behalf of the Administrator or otherwise as a plan fiduciary, from and against any and all loss resulting from liability to which the Administrator, director, officer or employee, may be subjected by reason of any act or conduct (except willful misconduct or gross negligence) in connection with the Plan or Trust Fund or both, including reasonable attorneys’ fees and amounts paid in settlement of any claims approved by the Company.
14.3 Compliance with ERISA
Anything herein to the contrary notwithstanding, nothing above or any other provision contained elsewhere in the Plan shall relieve a fiduciary or other person of any responsibility or liability for any responsibility, obligation or duty imposed upon him pursuant to Title I, Part 4 of ERISA. Furthermore, anything in the Plan to the contrary notwithstanding, if any provision of the Plan is voided by ERISA Sections 410 and 411, such provision shall be of no force and effect only to the extent that it is voided by such Section.
14.4 Nonalienation of Benefits

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(a)      None of the payments, benefits or rights of any Participant shall be subject to any claim of any creditor of such Participant and, in particular, shall be free from attachment, garnishment, trustee’s process, or any other legal or equitable process available to any creditor of such Participant. No Participant shall have the right to alienate, commute, pledge, encumber or assign any of the benefits or payments which he or she may expect to receive, contingently or otherwise, under the Plan, except the right to designate a Beneficiary or Beneficiaries as hereinbefore provided.
(b)      Section 14.4(a) also shall apply to the creation, assignment or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order, unless such order is a qualified domestic relations order as defined in Section 414(p) of the Code.
(c)      The Plan may offset against the Account of any Participant, any amount that the Participant is ordered or required to pay under a judgment, order, decree or settlement described in ERISA Section 206(d)(4) and Section 401(a)(13)(C) of the Code.
14.5 Employment not Guaranteed by Plan
Neither the establishment of the Plan nor its amendment nor the granting of a benefit pursuant to the Plan shall be construed as giving any Participant the right to continue as an employee of an Employer, as limiting the rights of such Employer to dismiss or impose penalties upon the Participant or as modifying in any other way the terms of employment of any Participant.
14.6 Form of Communication
Any election, application, claim, notice or other communication required or permitted to be made by or to a Participant, the Administrator, the Company, or an Employer in writing shall be made in such form as the Administrator, the Company or the Employer, as the case may be, shall prescribe. Such communication shall be effective upon mailing if sent first class, postage prepaid and addressed to the addressee at its principal office, or to the Participant at his last known address, or upon personal delivery, if delivered to an officer of the addressee or to the Participant, as the case may be.
14.7 Facility of Payment
If the Participant entitled to receive payments hereunder is unable to care for his affairs because of illness, accident or disability, and a duly qualified guardian or legal representative is appointed for such Participant, the Administrator shall direct the Trustees to pay any amount to which the Participant is entitled to such duly qualified guardian or legal representative upon claim of such guardian or legal representative. If a duly qualified guardian or legal representative is not appointed for such Participant, the Administrator shall direct the Trustees to pay any amount to which the Participant is entitled to such person’s Spouse, child, grandchild, parent, brother or sister or to a person deemed by the Administrator to have incurred expense for such person entitled to payment. Any payment made pursuant to this Section 14.7 in good faith shall be a payment for the account of the Participant and shall be a complete discharge from any liability of the Trust Fund or the Trustees therefor.
14.8 Service in More Than One Fiduciary Capacity

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Any individual, entity or group of persons may serve in more than one fiduciary capacity with respect to the Plan, the Trust Fund or both.
14.9 Binding Effect of Company’s Actions
Each Employer shall be bound by any and all decisions and actions taken by the Company hereunder.
14.10 Governing Law
Except to the extent inconsistent with and preempted by ERISA or other applicable Federal law, the Plan and all matters arising thereunder shall be governed by the laws of the Commonwealth of Massachusetts.
14.11 Military Service
Notwithstanding any other provision of the Plan to the contrary, service credit and contributions with respect to qualified Military Service will be provided in accordance with Section 414(u) of the Code. In addition, in accordance with Section 401(a)(37) of the Code, the survivors of a Participant who dies while performing qualified military service shall be entitled to additional benefits (other than benefit accruals relating to the period of qualified military service) that would be provided under the Plan if the Participant had resumed employment and then terminated employment on account of death. Thus, to the extent required by Section 401(a)(37) and Section 414(u)(8)(B), such a Participant shall be credited with vesting service for the period of the Participant’s qualified military service.







IN WITNESS WHEREOF, and as evidence of the adoption of the Plan, the undersigned officer duly authorized has appended his signature this 20 th day of December 2012.
PerkinElmer, Inc.

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By:
/s/ John R. Letcher
John R. Letcher
Its Senior Vice President
Human Resources




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APPENDIX A
ADDITIONAL RULES FOR PUERTO RICAN PARTICIPANTS
(as amended and restated effective January 1, 2002)
1.     Purpose and Effect – The purpose of this Appendix A is to modify the Plan to comply with the requirements of Sections 1165(a) and 1165(3) of the Puerto Rico Internal Revenue Code of 1994 (the “PR-Code”). The provisions of this Appendix A were originally effective on May 28, 1999, and the provisions of this Amended and Restated Appendix A are effective for Plan Years beginning on and after January 1, 2002. Appendix A shall only apply to those employees of the Employer whose compensation is subject to Puerto Rico Income Tax (“Appendix A Participants”).
2.     Type of Plan – It is the intent of the Employer that the Plan be a profit-sharing plan as defined in Article 1165-1 of the PR-Code Regulations and that it include a cash or deferred arrangement qualified pursuant to PR-Code Section 1165(e). Contributions to the Plan by the Employer shall be made out of the Employer’s current or accumulated earnings and profits.
Appendix A Participants Before-Tax Contributions – Appendix A Participants may direct the Employer to make Before-Tax Contributions out of current or accumulated earnings and profits of the Company up to an amount equal to the lesser of ten percent (10%) of the Appendix A Participant’s compensation or $7,500 or such other limit provided under the PR-Code. Such amount will not be adjusted to reflect cost of living increases. This limit shall be applied by aggregating all plans maintained by the Employer and all affiliates that provide for elective deferrals.
3.     Highly Compensated Appendix A Participant – Any Appendix A Participant who, determined on the basis of compensation for each Plan Year, has greater compensation than two-thirds of all other Appendix A Participants will be considered a Highly Compensated Appendix A Participant.
4.      Limitation on Appendix A Participants Before-Tax Contributions – For each Plan Year, in addition to satisfying the actual deferral percentage test of Section 401(k) of the United States Internal Revenue Code of 1986, the Plan shall satisfy the average deferral percentage test pursuant to PR-Code Section 1165(e)(3) and the regulations promulgated thereunder. This test must be complied with only taking into consideration Appendix A Participants.
In no event shall the actual deferral percentage of the Highly Compensated Appendix A participants for any Plan Year exceed the greater of:
(a)    the actual deferral percentage of all other Appendix A Participants for such Plan Year multiplied by 1.25; or
(b)    the actual deferral percentage of all other Appendix A Participants for such Plan Year multiplied by 2.0; provided that the actual deferral

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percentage of Highly Compensated Appendix A Participants does not exceed that of all other Appendix A Participants by more than two (2) percentage points.
The “actual deferral percentage” of a group of Appendix A Participants means the ratio (expressed as a percentage) of employer contributions made on behalf of the Appendix A Participant for the Plan Year to the Appendix A Participant’s Compensation for the Plan Year. For purposes of calculating the actual deferral percentage, Employer contributions made on behalf of the Appendix A Participants shall include (1) Before-Tax Contributions and (2) at the election of the Company, Qualified Nonelective Contributions and Qualified Matching Contributions.
5.     Modification of Plan . – Solely for purposes of applying the provisions of the Plan to Appendix A Participants, the Plan shall be modified as follows:
(a) A new Section 1.59 shall be added to read as follows:
“1.59 “Qualified Matching Contributions” means Matching Contributions that are nonforfeitable when made, and that are distributable only in accordance with the distribution provisions that are applicable to Before-Tax Contributions.”
(b) A new Section 1.60 shall be added to read as follows:
“1.60     “Qualified Nonelective Contributions” means contributions made by the Employer and allocated to Participant’s Account that the Participant may not elect to receive in cash until distributed from the Plan, that are nonforfeitable when made, and that are distributable only in accordance with the distribution provisions that are applicable to Before-Tax Contributions.”
(c)     Article III shall be amended to add a new subparagraph (f) to Section 3.7 to read as follows:
“(f)    In lieu of distributing Excess Contributions as provided in Section 3.9 of the Plan, the Employer may use Qualified Matching Contributions to satisfy the actual deferral percentage test. Qualified Matching Contributions shall be applied in an amount sufficient to cause the Plan to satisfy the actual deferral percentage test. Qualified Matching Contributions taken into account under the actual deferral percentage test are not considered in the Average Contribution Percentage test.”
(d)     Article III shall be further amended to add a new Section 3.15 titled “Qualified Nonelective Contributions” to read as follows:
“3.15 Qualified Nonelective Contributions

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The Employer may elect to make Qualified Nonelective Contributions under the Plan. The amount of such contribution to the Plan for each Plan Year, if any, shall be in an amount determined by the Employer. Qualified Nonelective Contributions shall be allocated to the Account of Appendix A Participants who are not Highly Compensated Appendix A Participants and who are designated by the Employer.
If the current year testing rules apply to the Plan, in lieu of distributing Excess Contributions or Excess Aggregate Contributions, the Employer may use all or any portion of the Qualified Nonelective Contributions to satisfy either the actual deferral percentage test or the Average Contribution Percentage test, or both, pursuant to regulations under the Code.”
6.     Use of Terms – All terms and provisions of the Plan shall apply to this Appendix A, except that where the terms and provisions of the Plan and this Appendix A conflict, the terms and provisions of this Appendix A govern.
 


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APPENDIX B
PREPARTICIPATION SERVICE
Employees of the following entities shall receive credit under the Plan for preparticipation service within the meaning of Treasury Regulation Section 1.401(a)(4)-11(d)(3)(ii)(A) for the following entities as of the dates indicated:
ENTITY
DATE
Packard Bioscience Company
November 13, 2001
Analytical Automation Specialists, Inc.
April 2, 2001
Lumen Technologies, Inc.
January 31, 2000
Wolfram, Inc.
January 31, 2000
Voltarc Technologies, Inc.
January 31, 2000
ILC Technology, Inc.
January 31, 2000
ORC Technologies
January 31, 2000

 


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APPENDIX C
EFFECTIVE DATE OF ADOPTION OF 5% MATCHING CONTRIBUTION
Life Sciences Divisions 154 and 179                February 1, 2001
All Other Life Sciences SBU                    January 1, 2003
Corporate (SBU 011)                        January 1, 2003
Analytical Instruments (SBU 193 and 229)            January 1, 2003
OptoElectronics (generally)                    January 1, 2009
OptoElectronics (grandfathered ERP
participants)                            January 31, 2011 (pro rated)





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APPENDIX D
FLUID SCIENCES PARTICIPANTS
Active Participants employed by the Fluid Sciences Strategic Business Unit at the sites identified below ceased to be employed by the Company as of the transaction dates identified below (each, a “Transaction Date”). Any such Fluid Sciences Participant who remained employed by the Company through his applicable Transaction Date shall have a fully vested and nonforfeitable right to his Account.

Division
Location Number(s)
Transaction Date
Industrial Technologies
San Antonio – 043
November 9, 2005
Aerospace
Beltsville – 075
Phelps – 025
December 6, 2005
December 6, 2005
 
Warwick – 031,040
December 6, 2005
Semiconductor
Daytona
February 28, 2006

With respect to such Fluid Sciences Participants for the Plan Year ending December 31, 2005 (December 31, 2006 with respect to Semiconductor employees), the Employer shall make Matching Contributions, as of the Transaction Date, on behalf of each such Participant who is employed on the Transaction Date. The amount of Matching Contributions allocable to the Matching Contribution Account of each such eligible Fluid Sciences Participant shall be 55% of the Participant’s Matched Contributions for the part of the Plan Year in which he is a Participant.


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APPENDIX E
IDS PARTICIPANTS
IDS Participants. Active Participants employed by the Company’s Illumination and Detection Solutions (“IDS”) business ceased to be employed by the Company and its affiliates as of November 28, 2010 (the “Final Employment Date”). Any such IDS Participant who remained employed by the Company through the Final Employment Date shall have a fully vested and nonforfeitable right to his Account.
With respect to such IDS Participants who are “Grandfathered Participants” described in Section 3.3(b)(ii) of the prior Plan, for the Plan Year ending December 31, 2010, the Employer shall make Matching Contributions, as of the Final Employment Date, on behalf of each such Participant who is employed on the Final Employment Date. The amount of Matching Contributions allocable to the Matching Contribution Account of each such eligible Grandfathered Participant shall be 55% of the Participant’s Matched Contributions (not exceeding 6% of Compensation) for the part of the Plan Year ending December 31, 2010 in which he is a Participant.
With respect to IDS Participants who are eligible to receive a Matching Contribution described in Section 3.3(a) of the Plan, the provisions of Section 3.3(a)(ii) shall be applied for the Plan Year ending December 31, 2010 by substituting the words “the Final Employment Date” for the words “December 1 of such Plan Year.”
For the avoidance of doubt, compensation attributable to periods on and after the Final Employment Date shall be disregarded for all purposes under the Plan and, on and after the Final Employment Date, PerkinElmer Illumination, Inc., PerkinElmer LED Solutions, Inc., and PerkinElmer Sensors, Inc. shall no longer be treated as Employers under the terms of the Plan because such entities have, following the Final Employment Date, ceased to be a subsidiaries or affiliates of the Company.

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Exhibit 10.37


PERKINELMER, INC.
EMPLOYEES RETIREMENT PLAN
__________________________________________________________________
(Amended and Restated Effective January 1, 2012)




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TABLE OF CONTENTS
ARTICLE I - GENERAL............................................................................................      I-1
1.1      Plan Name............................................................................................................I-1
1.2      Qualification of Plan...........................................................................................I-1
1.3      Purpose of Restatement......................................................................................I-1
1.4      Application...........................................................................................................I-1
1.5      Plan Frozen..........................................................................................................I-1
ARTICLE II - DEFINITIONS..........................................................................................II-1
2.1      “Accrued Benefit”.............................................................................................II-1
2.2      “Active Service”.................................................................................................II-1
2.3      “Actuarial Equivalent”.....................................................................................II-1
2.4      “Actuary”...........................................................................................................II-2
2.5      “Administrative Committee”...........................................................................II-2
2.6      “Affiliate”...........................................................................................................II-2
2.7      “Alternate Payee”..............................................................................................II-3
2.8      “Applicable Freeze Date”.................................................................................II-3
2.9      “Authorized Leave of Absence”.......................................................................II-3
2.10      “Average Earnings”...........................................................................................II-3
2.11      “Beneficiary”......................................................................................................II-4
2.12      “Board”..............................................................................................................II-4
2.13      “Break-in-Service”............................................................................................II-4
2.14      “Code”................................................................................................................II-4
2.15      “Company”........................................................................................................II-4
2.16      “Credited Service”.............................................................................................II-4
2.17      “Defined Benefit Dollar Limitation”...............................................................II-5
2.18      “Disabled Participant”......................................................................................II-5
2.19      “Early Retirement Date”..................................................................................II-5
2.20      “Earnings”.........................................................................................................II-5
2.21      “Effective Date”.................................................................................................II-6
2.22      “Eligible Spouse”...............................................................................................II-6
2.23      “Employee”........................................................................................................II-6
2.24      “Employer”........................................................................................................II-7
2.25      “Employment”...................................................................................................II-7
2.26      “ERISA”.............................................................................................................II-7
2.27      “Freeze Date”.....................................................................................................II-7
2.28      “Hour of Service”..............................................................................................II-7
2.29      “IDS” and “IDS Final Employment Date”.....................................................II-9
2.30      “Investment Manager”.....................................................................................II-9
2.31      “Joint Annuitant”..............................................................................................II-9
2.32      “Maximum Permissible Benefit”.....................................................................II-9
2.33      “Named Fiduciary”.........................................................................................II-11

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2.34      “Normal Retirement Age”..............................................................................II-11
2.35      “Normal Retirement Date”.............................................................................II-11
2.36      “Participant”....................................................................................................II-11
2.37      “Plan”...............................................................................................................II-11
2.38      “Plan Year”.......................................................................................................II-11
2.39      “Predecessor Corporation”............................................................................II-12
2.40      “Qualified Domestic Relations Order”..........................................................II-12
2.41      “Rehired Participant”.....................................................................................II-12
2.42      “Social Security Tax Base”.............................................................................II-12
2.43      “Subsidiary”.....................................................................................................II-12
2.44      “Surviving Spouse Option”............................................................................II-12
2.45      “Transaction Date”..........................................................................................II-12
2.46      “Transferred Participant”..............................................................................II-12
2.47      “Trust Fund”....................................................................................................II-13
2.48      “Trustees”.........................................................................................................II-13
2.49      “Year”      ...............................................................................................................II-13
2.50      “Year of Eligibility Service”...........................................................................II-13
2.51      “Year of Service”.............................................................................................II-13
ARTICLE III - PARTICIPATION.................................................................................III-1
3.1      Eligibility to Participate..................................................................................III-1
3.2      Former Participant..........................................................................................III-1
3.3      Plan Closed.......................................................................................................III-1
3.4      Belfab................................................................................................................III-1
3.5      Fluid Sciences Participants.............................................................................III-1
3.6      Participation by Former Missouri Metals Employees..................................III-2
3.7      Participation by Former Shop Union Employees.........................................III-2
3.8      Exclusions.........................................................................................................III-2
3.9      IDS Participants...............................................................................................III-3
ARTICLE IV - AMOUNT OF RETIREMENT INCOME...........................................IV-1
4.1      General..............................................................................................................IV-1
4.2      Normal Retirement Income.............................................................................IV-1
4.3      Early Retirement Income.................................................................................IV-3
4.4      Postponed Retirement Income........................................................................IV-4
4.5      Termination Prior to Retirement....................................................................IV-5
4.6      Disability Retirement Income..........................................................................IV-5
4.7      Determination of Accrued Benefit for Certain Participants........................IV-6
ARTICLE V - VESTED SERVICE..................................................................................V-1
5.1      General................................................................................................................V-1
5.2      Determination of Years of Service....................................................................V-1
5.3      Rehired Participant............................................................................................V-3

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ARTICLE VI - LIMITATIONS ON BENEFITS...........................................................VI-1
6.1      Defined Benefit Limitations............................................................................VI-1
6.2      Definitions.........................................................................................................VI-2
6.3      Funding-Based Limits....................................................................................VI-17
ARTICLE VII - CREDITED SERVICE.......................................................................VII-1
7.1      Determination of Credited Service...............................................................VII-1
ARTICLE VIII - PAYMENT OF RETIREMENT BENEFITS................................VIII-1
8.1      Normal Form of Payment.............................................................................VIII-1
8.2      Optional Forms of Payment.........................................................................VIII-4
8.3      Election Procedure........................................................................................VIII-5
8.4      Minimum Required Distributions...............................................................VIII-6
8.5      Suspension of Benefits................................................................................VIII-13
8.6      Direct Rollovers...........................................................................................VIII-15
ARTICLE IX - ADMINISTRATION.............................................................................IX-1
9.1      Administrative Committee..............................................................................IX-1
9.2      Agents of the Administrative Committee.......................................................IX-1
9.3      Procedures.........................................................................................................IX-1
9.4      Claims Procedures............................................................................................IX-1
9.5      Benefit Payments from Trust..........................................................................IX-3
9.6      Payment to Incompetents................................................................................IX-3
9.7      Powers of Administrative Committee.............................................................IX-3
9.8      Special Powers..................................................................................................IX-3
9.9      Use of Outside Specialists................................................................................IX-4
9.10      Power of Named Fiduciaries...........................................................................IX-5
9.11      Indemnification................................................................................................IX-5
ARTICLE X - TRUST FUND...........................................................................................X-1
10.1      Trust....................................................................................................................X-1
10.2      Return of Contributions....................................................................................X-1
10.3      Contributions.....................................................................................................X-1
ARTICLE XI - RETIREE HEALTH PLAN ACCOUNT.............................................XI-1
11.1      Establishment of Retiree Health Plan............................................................XI-1
11.2      Definitions.........................................................................................................XI-2
11.3      Election to Continue Coverage.......................................................................XI-3
11.4      Funding Method and Policy............................................................................XI-3
11.5      Subordination to Retirement Benefits............................................................XI-3
11.6      Benefits Provision.............................................................................................XI-4

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11.7      Coordination with Retiree Health Plan..........................................................XI-4
11.8      Reservation of the Right to Terminate Benefits............................................XI-4
11.9      Disallowance of Deduction..............................................................................XI-4
ARTICLE XII - AMENDMENT AND DURATION OF PLAN.................................XII-1
12.1      Right to Amend...............................................................................................XII-1
12.2      Right to Suspend.............................................................................................XII-1
12.3      Distribution of Funds upon Termination.....................................................XII-1
12.4      Termination Events........................................................................................XII-2
12.5      Merger or Consolidation................................................................................XII-3
ARTICLE XIII - MISCELLANEOUS........................................................................XIII-1
13.1      Plan Voluntary...............................................................................................XIII-1
13.2      Benefits Payable from Trust.........................................................................XIII-1
13.3      Non-alienation of Benefits............................................................................XIII-1
13.4      Rights of Participants...................................................................................XIII-1
13.5      Enforcement..................................................................................................XIII-2
13.6      Payment of Plan Expenses............................................................................XIII-2
13.7      Restriction on Benefits..................................................................................XIII-2
13.8      Illegal Provisions...........................................................................................XIII-3
13.9      Forfeitures......................................................................................................XIII-3
13.10      Lump Sum Payments....................................................................................XIII-3
13.11      Repayment of Lump Sums...........................................................................XIII-3
13.12      Headings.........................................................................................................XIII-4
13.13      Action by Employer.......................................................................................XIII-4
13.14      Gender and Number.....................................................................................XIII-4
13.15      Qualified Military Service............................................................................XIII-4
ARTICLE XIV - TOP-HEAVY PLAN RESTRICTIONS..........................................XIV-1
14.1      Definitions......................................................................................................XIV-1
14.2      Top-Heavy Plan..............................................................................................XIV-1
14.3      Restrictions.....................................................................................................XIV-2
14.4      Plan Aggregations..........................................................................................XIV-4

APPENDIX A......................................................................................................................A-1
APPENDIX B......................................................................................................................B-1
APPENDIX C......................................................................................................................C-1
APPENDIX D......................................................................................................................D-1
APPENDIX E.......................................................................................................................E-1
APPENDIX F........................................................................................................................F-1
APPENDIX G....................................................................................................................... G -1
APPENDIX H......................................................................................................................H-1

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ARTICLE I
GENERAL

1.1
Plan Name . The Plan shall be known as the PerkinElmer, Inc. Employees Retirement Plan. Prior to October 26, 1999, the Plan was known as the EG&G, Inc. Employees Retirement Plan.
1.2
Qualification of Plan . The Plan and any trust created hereunder are intended to meet the requirements of Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended from time to time, and the Employee Retirement Income Security Act of 1974, as amended from time to time.
1.3
Purpose of Restatement . The last amendment and restatement of the Plan, effective January 1, 2007, obtained a favorable ruling from the Internal Revenue Service regarding its qualified status. The current amendment and restatement of the Plan is effective January 1, 2012, except as otherwise specifically provided herein.
1.4
Application . The terms and conditions of the Plan shall, in all respects, apply to all Employees of all participating Employers, except as otherwise specifically provided in an Appendix.
1.5
Plan Frozen . Notwithstanding any provision of the Plan to the contrary, all accruals under the Plan shall cease effective as of the Freeze Date. The Accrued Benefit of all Participants shall be determined as of the Freeze Date, and shall not thereafter be increased by any service or compensation changes. All Participants actively accruing benefits in the Plan immediately prior to the Freeze Date shall be fully vested in their Accrued Benefit as of the Freeze Date. For the avoidance of doubt, a Participant who completed at least ten (10) Years of Service prior to the Freeze Date and who became a Disabled Participant prior to the Freeze Date, by reason of a determination by the Federal Social Security Administration made prior to the Freeze Date, shall be treated as having accrued his or her Disability Retirement Income benefit payable under Section 4.6 prior to the Freeze Date, and the provisions of this Section 1.5 shall not reduce the benefit

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otherwise payable pursuant to Section 4.6 for such a Disabled Participant. Benefits for Disabled Participants who had last actively performed services at sites previously affected by benefit freezes pursuant to Section 4.2 shall be determined in a similar manner. Accordingly, a Participant who last actively performed services at a site identified in Section 4.2(d) or (e), and who had completed at least ten (10) Years of Service prior to the date identified in Section 4.2(d) or (e), as applicable, (the “Applicable Freeze Date”) and who became a Disabled Participant prior the Applicable Freeze Date by reason of a determination by the Federal Social Security Administration made prior to the Applicable Freeze Date shall be treated as having accrued his or her Disability Retirement Income benefit payable under Section 4.6 prior to the Applicable Freeze Date, and the provisions of this Section 1.5 or Section 4.2 (d) or (e) shall not reduce the benefit otherwise payable pursuant to Section 4.6 for such a Disabled Participant.




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ARTICLE II

DEFINITIONS
The following terms shall have the meanings defined herein unless a different meaning is clearly indicated by the context.
2.1
“ Accrued Benefit ” means the amount of retirement income as of the calculation date determined in accordance with Section 4.2, and subject to the provisions of Section 4.7.
The Accrued Benefit of any Participant shall not be less than his Accrued Benefit determined as of December 31, 2011 in accordance with the applicable provisions of the Plan as in effect on such date.
2.2
“ Active Service ” means actual performance of duties as an Employee and shall not include time spent on an Authorized Leave of Absence.
2.3
“ Actuarial Equivalent ” means, for non-lump sum forms of payment, a benefit of equivalent value to the benefit which otherwise would have been provided determined on the basis of the 1971 Group Annuity Mortality Table with no loading, and projected by Scale E, with a one (1) year age setback for the Participant and a five (5) year age setback for any Beneficiary, and on the basis of an interest rate of seven percent (7%).
In the case of a lump sum form of payment, Actuarial Equivalent shall, instead, be based on the Applicable Mortality Table and the Applicable Interest Rate.
For purposes of this Section 2.3, the following definitions shall apply:
(a)
Applicable Mortality Table means the mortality table based on the prevailing commissioners’ standard table (described in Section 807(d)(5)(A) of the Code) used to determine reserves for group annuity contracts issued on the date as of which present value is being determined (without regard to any other subparagraph of Section 807(d)(5) of the Code) that is prescribed by the Commissioner of the Internal Revenue Service in revenue rulings, notices or other

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guidance published in the Internal Revenue Bulletin. Effective for distributions with annuity starting dates (as defined in Section 417(f)(2) of the Code) on or after December 31, 2002, the Applicable Mortality Table means the mortality table set forth in Rev. Rul. 2001-62. For Plan Years beginning after December 31, 2007, the “Applicable Mortality Table” means the mortality table prescribed under Section 417(e)(3)(B) of the Code.
(b)
Applicable Interest Rate means the annual interest rate on 30-year Treasury securities as specified by the Commissioner of the Internal Revenue Service for the Lookback Month, as published in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin. For Plan Years beginning after December 31, 2007, the “Applicable Interest Rate” means the segment rates of interest for the Lookback Month, as defined in Section 417(e)(3)(C) of the Code.
(c)
Lookback Month means the second full calendar month preceding the first day of the Stability Period.
(d)
Stability Period means the Plan Year that contains the annuity starting date.
2.4
“ Actuary ” means a Fellow or Associate of the Society of Actuaries or a Member of the American Academy of Actuaries, who is Enrolled by the Joint Board for the Enrollment of Actuaries and who has been retained by the Administrative Committee as Actuary for the Plan.
2.5
“ Administrative Committee ” means the Plan’s Administrative Committee consisting of the Company’s Senior Vice President Human Resources, and such other individuals as he shall from time to time appoint.
2.6
“ Affiliate ” shall mean a corporation (i) in which the Company and/or a Subsidiary has an equity interest of less than fifty percent (50%) or a note or debenture convertible into an equity interest and (ii) which is determined by the Administrative Committee to be an affiliated corporation. For purposes of Article V, Affiliate means the Company and any corporation which is a member of a controlled group of corporations (as defined in Section 414(b) of the Code) which includes the Company; any trade or business (whether

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or not incorporated) which is under common control (as defined in Section 414(c) of the Code) with the Company; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Section 414(m) of the Code) which includes the Company; and any other entity required to be aggregated with the Company in accordance with regulations issued under Section 414(o) of the Code.
2.7
“ Alternate Payee ” means a Spouse, former Spouse, child, or other dependent of a Participant who is recognized by a Qualified Domestic Relations Order as having a right to receive all or a portion of the benefits of a Participant.
2.8
“ Applicable Freeze Date ” has the meaning ascribed to it in Section 1.5.
2.9
“ Authorized Leave of Absence ” means any leave of absence granted by an Employer under the Employer’s leave of absence policy, including a leave granted to an Employee who is absent from work due to either (a) the pregnancy of such Employee, (b) the birth of a child of the Employee, (c) the placement of a child in connection with the adoption of the child by the Employee, or (d) for purposes of caring for the child during the period immediately following the birth or placement for adoption.
2.10
“ Average Earnings ” means the average annual Earnings of a Participant for the highest sixty (60) successive months of Credited Service for which the Employee is compensated by an Employer out of the last one hundred and twenty (120) months of such Credited Service prior to his date of termination of Employment. A Participant who does not have sixty (60) successive months of Credited Service shall have his average Earnings calculated over a period of months of Credited Service evenly divisible by twelve. If such a Participant’s successive months of Credited Service are not evenly divisible by twelve, Earnings attributable to a period of Credited Service of less than twelve months shall be annualized.
Except as provided herein with respect to certain Transferred Participants or Rehired Participants, Earnings received during a month in which the Participant is not accruing Credited Service shall not be used in the determination of Average Earnings. Notwithstanding the foregoing, in the case of a Transferred Participant or a Rehired Participant whose date of transfer or rehire by an Employer, Affiliate or Subsidiary is

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prior to March 15, 2003, Average Earnings shall mean the average annual Earnings of the Participant for the highest five (5) successive Years of Service out of the last ten (10) Years of Service with an Employer, Affiliate or Subsidiary prior to his date of termination from such Employer, Affiliate or Subsidiary. In the event that such a Transferred Participant or Rehired Participant is not employed by an Employer, Affiliate or Subsidiary for a full five (5) successive year period, Average Earnings will be based on the five (5) highest compensated years in the last ten (10) years with the Employer, Affiliate or Subsidiary.
2.11
“ Beneficiary ” means a person(s), trust, or other entity designated by the Participant, on the form and in a manner prescribed by the Administrative Committee, to receive any benefits which shall be payable under the Plan in the event of the Participant’s death, or in the absence of such designation, the Participant’s estate. Pre-retirement death benefits which become payable under Article VIII may only be paid to a Participant’s Eligible Spouse (or former spouse to the extent provided under a Qualified Domestic Relations Order).
2.12
“ Board ” means the Board of Directors of the Company.
2.13
“ Break-in-Service ” means a calendar year after the Effective Date during which a Participant completes less than five hundred (500) Hours of Service.
2.14
“ Code ” means the Internal Revenue Code of 1986, as amended from time to time, and any regulations issued thereunder.
2.15
“ Company ” means PerkinElmer, Inc. Prior to October 26, 1999, Company means EG&G, Inc.
2.16
“ Credited Service ” means that portion of a Participant’s Employment, as determined in accordance with Article VII, which will be used in determining the amount of a Participant’s retirement benefit under the Plan.




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2.17
“ Defined Benefit Dollar Limitation ” is $160,000, as adjusted, ($200,000 in 2012) effective January 1 of each year, under Section 415(d) of the Code in such manner as the Secretary shall prescribe, and payable in the form of a straight life annuity. A limitation as adjusted under Section 415(d) of the Code will apply to limitation years ending with or within the calendar year for which the adjustment applies.
2.18
“ Disabled Participant ” means a Participant who incurs a physical or mental condition which, as determined by the Federal Social Security Administration, renders the Participant eligible to receive disability benefits under Title II of the Federal Social Security Act, as amended from time to time.
2.19
“ Early Retirement Date ” means the first day of any month which is not more than ten (10) years prior to an Employee’s Normal Retirement Date, which that Employee, who will then have completed at least ten (10) Years of Service, elects, on a written form acceptable to the Administrative Committee, as a date on which he wishes to retire. For an Employee who was a Participant on December 31, 1988, “Early Retirement Date” means the first day of any month after an Employee’s fifty-fifth (55th) birthday, which that Employee, who will then have completed at least ten (10) Years of Service, elects, on a written form acceptable to the Administrative Committee, as a date on which he wishes to retire.
2.20
“ Earnings ” means the regular base wage or salary received by the Employee from an Employer, Affiliate, or Subsidiary, inclusive of commissions and severance, but exclusive of any bonus, overtime payments, or any other additives to the base wage or salary.
Earnings shall not include any amount in excess of the limit prescribed under Section 401(a)(17) of the Code, as adjusted for cost-of-living in accordance with Section 401(a)(17)(B) of the Code.
The annual Earnings of each Participant taken into account in determining benefit accruals in any Plan Year beginning after December 31, 2002, shall not exceed $200,000, as adjusted ($250,000 in 2012). Annual Earnings means compensation during the Plan

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Year or such other consecutive 12-month period over which earnings are otherwise determined under the Plan (the determination period). For purposes of determining benefit accruals in a Plan Year beginning after December 31, 2002, Earnings for any prior determination period shall be $200,000.
The $250,000 limit on annual Earnings in paragraph 1 shall be adjusted for cost-of-living increase in accordance with Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a calendar year applies to annual Earnings for the determination period that begins with or within such calendar year.
If a determination period consists of fewer than twelve (12) months, the annual Earnings limit is an amount equal to the otherwise applicable annual Earnings limit multiplied by a fraction, the numerator of which is the number of months in the short determination period and the denominator of which is twelve (12).
Except as may be provided in Section 4.7, if Earnings for any prior determination period are taken into account in determining a Participant’s benefits for the current Plan Year, the Earnings for such prior determination period are subject to the applicable annual Earnings limit in effect for that prior period.
2.21
“ Effective Date ” shall mean January 1, 2012, the date as of which this amendment and restatement of the Plan is effective except as otherwise specifically provided herein. As so amended and restated, the respective provisions of the Plan shall apply only to Employees who terminate on or after the Effective Date. The rights and benefits, if any, of each other Employee shall be determined in accordance with the respective provisions of the Plan in effect on the date such Employee terminated service.
2.22
“ Eligible Spouse ” means a person who was legally married to the Participant on the date of retirement or death of the Participant.
2.23
“ Employee ” means any person employed by an Employer. A “Full-Time Employee” is an Employee who works the regular full-time workweek for his Employer, whether or not that Employee is considered regular or temporary by the Employer. A “Part-Time Employee” is an Employee who does not normally work the regular full-time workweek

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for his Employer, whether or not that Employee is considered regular or temporary by the Employer.
Leased employees (as defined in Section 414(n)(2) of the Code) shall be considered Employees only to the extent required under Section 414 of the Code.
Notwithstanding any other provision of the Plan, the term “Employee” shall not include any employee, independent contractor, leased employee or other individual unless such individual is contemporaneously treated by the Employer as an Employee for purposes of the Plan (without regard to any subsequent recharacterization or inconsistent determination made by any person or entity or by any court, agency or other authority with respect to such individual).
2.24
“ Employer ” means the Company and/or a Subsidiary which is authorized by the Board to participate in the Plan and, in fact, does adopt the Plan.
2.25
“ Employment ” means service in the employ of an Employer, provided, however, that transfer from one Employer to another does not constitute a termination of Employment hereunder whatever its common law effects.
2.26
“ ERISA ” means Public Law 93-406, Employee Retirement Income Security Act of 1974, as amended from time to time.
2.27
“ Freeze Date ” means January 31, 2011.
2.28
“ Hour of Service ” shall be determined from the Employer’s records and shall include:
(a)
hours for which an Employee is directly or indirectly paid, or is entitled to payment, for the performance of duties for an Employer;
(b)
hours for which back pay, irrespective of mitigation of damages, is either awarded to or agreed by the Employer; and
(c)
hours for which an Employee is paid, or entitled to payment, by an Employer on account of a period of time during which no duties are performed (irrespective of whether or not the Employee is still in the Employment of an Employer) due to

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vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence.
(d)
Notwithstanding anything to the contrary contained in the foregoing, an Employee may receive credit for the same Hour of Service only under one of the preceding subsections;
(i)
no more than five hundred one (501) Hours of Service are required to be credited under Paragraph (c) above to an Employee on account of any single continuous period during which the Employee performs no duties (whether or not such period occurs in a single Year); and
(ii)
an hour for which an Employee is paid or entitled to payment on account of a period during which no duties are performed is not required to be credited to the Employee if such payment:
(A)
is made or due under a plan maintained solely for the purpose of complying with applicable workers’ compensation or unemployment compensation or disability insurance laws, or
(B)
solely reimburses the Employee for medical or medically-related expenses incurred by the Employee.
(e)
Each hour not counted under Paragraphs (a), (b), (c) or (d) above during a period of military service, in the case of an Employee who was employed by the Employer prior to such military service and who returns to employment with the Employer while protected by reemployment rights under federal law.
(f)
Hours of Service, except as provided below, will be credited to the Year to which they are attributable. In the case of Hours of Service attributable to a period of no more than thirty-one (31) days which overlaps two (2) Years, all such Hours of Service shall be credited to either Year, as determined by the Administrative Committee.

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Hours of Service shall be computed and credited in accordance with paragraphs (b) and (c) of Section 2530.200b 2 of the U.S. Department of Labor Regulations; provided, however, that in the case of an Employee for whom record of actual hours worked is not maintained, Hours of Service shall be credited in accordance with Section 2530.200b 3(e)(1)(iv) of the U.S. Department of Labor Regulations on the basis of 190 Hours of Service per month for each month in which the Employee would be required to be credited with at least one Hour of Service under Section 2530.200b 2 of the U.S. Department of Labor Regulations.
2.29
“ IDS ” and “ IDS Final Employment Date ” have the meaning ascribed to them in Section 3.9.
2.30
“ Investment Manager ” means the individuals and/or other entities appointed in accordance with Section 9.10 who have acknowledged in writing that they are a Named Fiduciary with respect to the Plan and who is:
(a)
registered as an investment advisor under the Investment Advisors Act of 1940; or
(b)
a bank, as defined in such Act; or
(c)
an insurance company qualified to manage, acquire or dispose of assets of pension plans.
2.31
“ Joint Annuitant ” means a person designated by a Participant, in accordance with Section 8.2.
2.32
“ Maximum Permissible Benefit ” means the lesser of the Defined Benefit Dollar Limitation or the Defined Benefit Compensation Limitation (both adjusted where required, as provided in (a) and, if applicable, in (b) or (c) below).
(a)
If the Participant has fewer than 10 Years of Participation in the Plan, the Defined Benefit Dollar Limitation shall be multiplied by a fraction, (i) the numerator of which is the number of years (or part thereof) of participation in the Plan and (ii) the denominator of which is 10. In the case of a Participant who has fewer than 10 Years of Service with the Employer, the Defined Benefit Compensation

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Limitation shall be multiplied by a fraction, (i) the numerator of which is the number of Years (or part thereof) of Service with the Employer and (ii) the denominator of which is 10.
(b)
If the benefit of a Participant begins prior to age 62, the Defined Benefit Dollar Limitation applicable to the Participant at such earlier age is an annual benefit payable in the form of a straight life annuity beginning at the earlier age that is the Actuarial Equivalent of the Defined Benefit Dollar Limitation applicable to the Participant at age 62 (adjusted under (a) above, if required). The Defined Benefit Dollar Limitation applicable at an age prior to age 62 is determined as the lesser of (i) the Actuarial Equivalent (at such age) of the Defined Benefit Dollar Limitation computed using the interest rate and mortality table specified in Section 2.3 of the Plan and (ii) the Actuarial Equivalent (at such age) of the Defined Benefit Dollar Limitation computed using a 5 percent (5%) interest rate and the applicable Mortality Table as defined in Section 2.3(a) of the Plan. Any decrease in the Defined Benefit Dollar Limitation determined in accordance with this paragraph (b) shall not reflect a mortality decrement if benefits are not forfeited upon the death of the Participant. If any benefits are forfeited upon death, the full mortality decrement is taken into account.
(c)
If the benefit of a Participant begins after the Participant attains age 65, the Defined Benefit Dollar Limitation applicable to the Participant at the later age is the annual benefit payable in the form of a straight life annuity beginning at the later age that is actuarially equivalent to the Defined Benefit Dollar Limitation applicable to the Participant at age 65 (adjusted under (a) above, if required). The Actuarial Equivalent of the Defined Benefit Dollar Limitation applicable at an age after age 65 is determined as (i) the lesser of the Actuarial Equivalent (at such age) of the Defined Benefit Dollar Limitation computed using the interest rate and mortality table specified in Section 2.3 of the Plan and (ii) the Actuarial Equivalent (at such age) of the Defined Benefit Dollar Limitation computed using a 5 percent (5%) interest rate assumption and the Applicable Mortality Table as

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defined in Section 2.3(a) of the Plan. For these purposes, mortality between age 65 and the age at which benefits commence shall be ignored
2.33
“ Named Fiduciary ” means the Administrative Committee, the Trustees and the Investment Manager(s), but only with respect to the specific responsibilities of each for the administration of the Plan.
2.34
“ Normal Retirement Age ” means the age determined in accordance with the following table:
Age
Year of Birth

65
1937 and Earlier
65 plus 2
months/year
1938 – 1942
66
1943 – 1954
66 plus 2
months/year
1955 – 1959
67
1960 and later

Prior to January 1, 1989, the Normal Retirement Age was 65, provided however, that the Employee is 100% vested on the day the Employee attained 65.
2.35
“ Normal Retirement Date ” means the first day of the month following the month in which the Participant attains his Normal Retirement Age.
2.36
“ Participant ” means an Employee who meets the requirements for participation as provided in Article III, or a former Employee who is receiving benefits under the Plan or who has vested rights under the Plan.
2.37
“ Plan ” means the PerkinElmer, Inc. Employees Retirement Plan as set forth herein and as it may from time to time be duly amended. Prior to October 26, 1999, Plan means the EG&G, Inc. Employees Retirement Plan.
2.38
“ Plan Year ” means the twelve (12) month period commencing on January 1st and ending on December 31st.


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2.39
“ Predecessor Corporation ” means a corporation that has merged into or consolidated with, or whose voting stock or assets have all or substantially all been acquired by the Company or a Subsidiary.
2.40
“ Qualified Domestic Relations Order ” means an order as defined in Section 414(p) of the Code.
2.41
“ Rehired Participant ” means an individual who terminates Employment with an Employer and begins employment with an Employer, Affiliate or Subsidiary on a date later than the next regularly scheduled work day and would have his prior service reinstated under the reinstatement rules set forth in Section 5.3(b) had he been rehired by an Employer.
2.42
“ Social Security Tax Base ” means the thirty-five (35) year average of maximum wages upon which Social Security taxes were based during each of the calendar years ending with the calendar year in which the Employee reaches his Normal Retirement Age, assuming no change in the Social Security maximum taxable wage after the Employee’s termination of Employment. In order to determine the Social Security Tax Base for an Employee who works beyond his Normal Retirement Age, it will be assumed that the Employee’s Normal Retirement Age occurs in his year of termination.
2.43
“ Subsidiary ” means a corporation fifty percent (50%) or more of the voting stock of which is owned legally or beneficially by the Company and/or by a Subsidiary or Subsidiaries of the Company.
2.44
“ Surviving Spouse Option ” means that the Participant’s retirement income will be paid in the form of a fifty percent (50%) Joint and Survivor option determined in accordance with Section 8.1(b)(i).
2.45
“ Transaction Date ” has the meaning ascribed to it in Section 3.5.
2.46
“ Transferred Participant ” means an individual who terminates Employment with an Employer and begins employment with an Affiliate or Subsidiary on the next following regularly scheduled workday.


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2.47
“ Trust Fund ” means any fund established by a trust agreement and held by a Trustee or Trustees in order to provide for benefits under the Plan.
2.48
“ Trustees ” means the persons or corporations named by the Company, and who have agreed to serve in such capacity.
2.49
“ Year ” means the twelve (12) month period ending on the day prior to the anniversary of the Employee’s date of hire by an Employer, or where the Employee has incurred a Break-in-Service, the twelve (12) month period ending on the day prior to the anniversary of the Employee’s reemployment commencement date.
2.50
“ Year of Eligibility Service ” means a Year in which a Participant is credited with one thousand (1,000) or more Hours of Service.
2.51
“ Year of Service ” means a Year of Service as defined in Article V.


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ARTICLE III

PARTICIPATION
3.1
Eligibility to Participate . Each Employee who was a Participant in the Plan as of December 31, 2011 shall continue to participate in the Plan, subject to the provisions of Section 1.5.
3.2
Former Participant . A former Participant receiving or entitled to receive a retirement benefit under the Plan shall continue as a Participant until the date of his death. The rights and benefits of a former Participant will be determined in accordance with the provisions of the Plan in effect on the Participant’s retirement date or date of termination of Employment, if earlier.
3.3
Plan Closed . In no event shall an individual become a Participant after March 15, 2003.
3.4
Belfab . Former hourly employees of Belfab who were acquired by the Employer shall participate in the Plan but shall not be subject to the basic terms and conditions of the Plan. Instead, such former hourly employees of Belfab shall be subject to the terms and conditions of the John Crane, Inc. Employees’ Pension Plan - Belfab Hourly Employees as in effect on March 31, 1998, the terms and conditions of which are explicitly herein incorporated by reference.
3.5
Fluid Sciences Participants . Active Participants employed by the Fluid Sciences Strategic Business Unit at the sites identified below ceased to be employed by the Company as of the transaction dates identified below (each, a “Transaction Date”). Any such Fluid Sciences Participant who remained employed by the Company through his applicable Transaction Date shall have a fully vested and nonforfeitable right to his Accrued Benefits as determined as of the Transaction Date. No further benefits shall accrue under the Plan for such a Fluid Sciences Participant for any period occurring after his applicable Transaction Date.

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Division
Location Number(s)
Transaction Date

Industrial Technologies
San Antonio – 043
November 9, 2005
Aerospace
Beltsville – 075
December 6, 2005
 
Phelps – 025
December 6, 2005
 
Warwick – 031, 040
December 6, 2005
Semiconductor
Daytona
February 28, 2006
3.6
Participation by Former Missouri Metals Employees . Notwithstanding anything herein to the contrary, effective on September 30, 2004 (the date of the merger of the Missouri Metals Shaping Company Employees Pension Plan with and into the Plan), former hourly employees of the Company who participated in the Missouri Metals Shaping Company Employees Pension Plan will become Participants in the Plan. Such Participants shall not be subject to the benefit provisions of Articles III, IV, V, VII, and VIII hereunder, but shall instead be subject to the benefit accrual and time and form of payment provisions of the Missouri Metals Shaping Company Pension Plan as of September 30, 2004 (as set forth in Appendix G) , and the terms of such provisions are explicitly herein incorporated by reference. In no event shall the Accrued Benefit of a Participant described in this Section 3.6 be less than his accrued benefit under the Missouri Metals Shaping Company Pension Plan.
3.7
Participation by Former Shop Union Employees . Notwithstanding anything herein to the contrary, effective on March 31, 2007 (the date of the merger of the PerkinElmer Shop Union Pension Plan with and into the Plan), former hourly employees of the Company who participated in the PerkinElmer Shop Union Pension Plan will become Participants in the Plan. Such Participants shall not be subject to the benefit provisions of Articles III, IV, V, VII, and VIII hereunder, but shall instead be subject to the benefit accrual and time and form of payment provisions of the PerkinElmer Shop Union Pension Plan as of March 31, 2007 (as set forth in Appendix H) , and the terms of such provisions are explicitly herein incorporated by reference. In no event shall the Accrued Benefit of a Participant described in this Section 3.7 be less than his accrued benefit under the PerkinElmer Shop Union Pension Plan.
3.8
Exclusions . No individual whose work site location is identified on Schedule 3.8 to the Plan, as from time to time in effect, shall become a Participant in the Plan.

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3.9
IDS Participants . Active Participants employed in the Company’s Illumination and Detection Solutions (“IDS”) business ceased to be employed by the Company and its Subsidiaries as of November 28, 2010 (the “IDS Final Employment Date”). Any such IDS Participant who remained employed by the Company through the IDS Final Employment Date shall have a fully vested and nonforfeitable right to his Accrued Benefit as determined as of the IDS Final Employment Date. For the avoidance of doubt, no further benefits shall accrue under the Plan for such IDS Participant for any period occurring after the applicable IDS Final Employment Date.




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ARTICLE IV

AMOUNT OF RETIREMENT INCOME
4.1
General . To establish eligibility for a retirement benefit, a Participant shall file an application for such benefit on a form and in a manner prescribed by the Administrative Committee.
4.2
Normal Retirement Income . A Participant who retires upon attaining his Normal Retirement Age shall have a nonforfeitable right to his retirement income and shall be entitled to receive a monthly retirement income for life, payable as of his Normal Retirement Date, which shall be the greatest of (a), (b) and (c) below:
(a)
Seventy dollars and eighty-three cents ($70.83)
(b)
One-twelfth (1/12) of the sum of (i), (ii) and (iii) below:
(i)
eighty-five one hundredth’s percent (0.85%) of his Average Earnings, multiplied by his years of Credited Service, plus
(ii)
seventy-five one hundredth’s percent (0.75%) of that part, if any, of his Average Earnings in excess of the Social Security Tax Base, multiplied by the lesser of:
(A)
his years of Credited Service, and
(B)
thirty-five (35)
(iii)
solely for Participants listed in Appendix B, the product of (A) multiplied by (B) below where:
(A)
one and six-tenth’s percent (1.6%) of his Average Earnings multiplied by his years of Credited Service, times the ratio determined by dividing his service credit as set forth in Appendix B (if any) by twenty-five (25), and

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(B)
equals, for a Participant who retires or terminates employment prior to attaining his Normal Retirement Age, a fraction, the numerator of which is the Participant’s actual years of Credited Service, and the denominator of which is the Participant’s Years of Credited Service that he would have had at Normal Retirement Age (in both cases disregarding Credited Service before January 1, 1994).
(c)
For an Employee who was a Participant as of December 31, 2000, the monthly retirement benefit income accrued as determined under the provisions of the Plan determined as of that date.
(d)
No further benefits shall accrue under the Plan for any period occurring after January 31, 2001 for any Participant who is an Employee of Life Science Divisions 154 and 179 (formerly EG&G Wallac) other than as may be required in accordance with Section 416 of the Code or other than in connection with a transfer of the Participant’s employment to a site whose employees are active Participants accruing benefits under Section 4.2 (subject to Section 3.3).
(e)
No further benefits shall accrue under the Plan for any period occurring after March 15, 2003 for any Participant who is employed by Corporate (Strategic Business Unit 011) or by Analytical Instruments (Strategic Business Unit 193 or 229) other than as may be required in accordance with Section 416 of the Code or other than in connection with a transfer of the Participant’s employment to a site whose employees are active Participants accruing benefits under Section 4.2 (subject to Section 3.3). This Section 4.2(e) shall not apply to any Participant employed at either of the foregoing designated locations who, as of March 15, 2003, had both attained age 50 and accrued 10 years of Credited Service (the “Grandfathered Participants”). The provisions of the Plan as in effect prior to the effective date of this Section 4.2(e) shall continue to apply to the Grandfathered

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Participants until March 15, 2008, after which date no further benefits shall accrue other than as may be required in accordance with Section 416 of the Code.
(f)
Effective January 1, 2009, the Company discontinued the use of “Strategic Business Unit” as a basis for classifying its workforce and instead uses site codes. Each Participant actively accruing benefits as of December 31, 2008 shall remain eligible for the accrual of benefits under the provisions of the Plan for so long as he continues employment with the Employer at the site code he was employed at on December 31, 2008 (or at another site whose employees are active Participants accruing benefits under Section 4.2 (subject to Section 3.3 and Section 4.2(g)).
(g)
Notwithstanding any provisions of the Plan to the contrary, no further benefits shall accrue under the Plan for any period occurring after January 31, 2011.
4.3
Early Retirement Income . A Participant retiring on an Early Retirement Date shall be entitled to receive a retirement income which shall be determined in accordance with either (a) or (b) below, as elected by the Participant:
(a)
The Participant may elect to defer commencement of his retirement income until his Normal Retirement Date. The amount of his retirement income will be determined in accordance with Section 4.2 based on his Credited Service as of his Early Retirement Date.
(b)
The Participant may elect at his Early Retirement Date or at any time prior to his Normal Retirement Date to have his retirement income commence on the first day of any month after the date of his retirement, but no later than his Normal Retirement Date. The amount of his retirement income payable at his Early Retirement Date shall be a percentage of his retirement income payable at his Normal Retirement Date as follows:


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Years Prior to Normal
Retirement Age
Percent of Retirement Benefit Payable at Early Retirement Date For an Employee Retiring With Less than Thirty (30) Years of Service
Percent of Retirement Benefit at Early Retirement Date For an Employee Retiring With At Least Thirty (30) Years of Service
 
Sections 4.2(b)(i),
4.2(b)(ii) and
4.2(b)(iii)
Benefit
Sections 4.2(a), 4.2(b)(i) and 4.2(b)(iii) Benefit
Section 4.2(b)(ii) Benefit
0
100.0%
100.0%
100.0%
1
93.3
100.0
93.3
2
86.7
100.0
86.7
3
80.0
100.0
80.0
4
73.3
91.6
73.3
5
66.7
83.2
66.7
6
63.3
79.0
63.3
7
60.0
74.8
60.0
8
56.7
70.6
56.7
9
53.3
66.4
53.3
10
50.0
62.2
50.0
11
45.0
58.0
45.0
12
40.0
53.8
40.0

4.4
Postponed Retirement Income . A Participant may remain employed after his Normal Retirement Age. His retirement benefits will not begin until he actually retires. His additional Years of Service after his Normal Retirement Date will be counted as Credited Service and any salary increases after his Normal Retirement Age will be taken into consideration in the determination of Average Earnings.


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4.5
Termination Prior to Retirement . A Participant whose Employment terminates prior to his Normal Retirement Age but after the completion of at least five (5) Years of Service shall be entitled to receive a monthly retirement income for life payable as of his Normal Retirement Date, which monthly retirement income shall be determined in accordance with Section 4.2. A Participant whose Employment terminates after the completion of at least ten (10) Years of Service shall also be eligible to elect an Early Retirement Date, in which case the amount of his retirement income shall be determined in accordance with Section 4.3(b). Notwithstanding the foregoing, each Participant who (i) was employed in the operation of the business of PKL LLC on October 2, 2000 and who became a “Transferred Employee” pursuant to the stock purchase agreement dated September 15, 2000 by and between the Employer and Kenlee Precision Corporation and (ii) had three (3) or more Years of Service on September, 2000, shall have a nonforfeitable right to receive a monthly retirement income for life payable as of his Normal Retirement Date and determined in accordance with Section 4.2
4.6
Disability Retirement Income . A Participant, who has completed at least ten (10) Years of Service and becomes a Disabled Participant while an Employee, will be eligible to receive a retirement benefit determined in accordance with Section 4.2 commencing at his Normal Retirement Date. Provided, however, that if such Participant is receiving Long-Term Disability (LTD) benefit payments under an Employer-sponsored LTD plan, his LTD benefit payments will be reduced by the amount of his benefit payable under the Plan. For purposes of the Plan, the Participant’s Average Earnings shall be computed by assuming that his Earnings during his status as a Disabled Participant were at the same rate as in effect on the last day of Active Service as an Employee and the Participant shall be considered as accruing Hours of Service in accordance with the normal work week for each week that he remains a Disabled Participant up to his Normal Retirement Date or his annuity starting date with the Company, if earlier. A Disabled Participant who elects an Early Retirement Date shall have his benefit determined by applying the provisions of Section 4.3 to his retirement income payable at his Normal Retirement Date, computing such retirement income by taking into account the provisions of this Section 4.6.

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4.7
Determination of Accrued Benefit for Certain Participants . Notwithstanding any other provision in the Plan, each Section 401(a)(17) Participant’s Accrued Benefit under the Plan will be the greater of:
(a)
the Participant’s Accrued Benefit as of December 31, 1993, frozen in accordance with Treasury Regulation 1.401(a)(4)-13, or
(b)
the Participant’s Accrued Benefit determined with respect to the benefit formula applicable for the Plan Year beginning on January 1, 1994, as applied to the Participant’s total years of Credited Service taken into account under the Plan for purposes of benefit accruals and based on the two hundred thousand dollar Earnings limit, as adjusted, ($250,000 for 2012) as described in Section 2.20.
(i)
A Section 401(a)(17) Participant means a Participant whose current Accrued Benefit as of a date on or after the first day of the first Plan Year beginning on or after January 1, 1994, is based on Earnings for a year beginning prior to the first day of the first Plan Year beginning on or after January 1, 1994, that exceeded the current Section 401(a)(17) of the Code limitation on Earnings considered for this purpose.


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ARTICLE V
5.1
General . A Participant’s eligibility for retirement income benefits under the Plan shall be based on his Years of Service. Years of Service shall be determined in accordance with Section 5.2 below.
5.2
Determination of Years of Service . A Participant’s Years of Service shall be determined in accordance with the following:
(a)
For a Participant as of the Effective Date, who had been covered under the prior provisions of the Plan, the Participant’s continuous service with the Employer prior to the Effective Date, determined in accordance with the provisions of the Plan in effect prior to the Effective Date, shall be counted as Years of Service.
(b)
Subject to Section 5.2(a), a Participant shall accrue a Year of Service for each Year ending after the Effective Date in which he has one thousand (1,000) or more Hours of Service. Any Year in which the Participant has less than one thousand (1,000) but more than five hundred one (501) Hours of Service shall not constitute a Break-in-Service but will not be considered as a Year of Service. If in any Year, the Participant has less than five hundred one (501) Hours of Service, he shall incur a Break-in-Service.
(c)
For purposes of Section 5.2(b), a Participant shall be considered as accruing Hours of Service in accordance with his normal work week for each week:
(i)
while on an Authorized Leave of Absence, if at or before the end of such Authorized Leave of Absence, the Participant returns to Active Service, provided however, that a Participant on an Authorized Leave of Absence who fails to return to Active Service at or before the end of such Authorized Leave of Absence, will be considered to have terminated his Employment as of the last day of Active Service with an Employer or with a Subsidiary or Affiliate. If, however, such failure to return was due to death, disability, or retirement on his Early or Normal Retirement Date,

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the Participant’s date of termination will be the date on which one of the above occurs.
(ii)
during the one (1) year period following the date on which a Participant is laid off due to a reduction in work force provided the Participant returns to Active Service within the one (1) year period following his date of termination. If the Participant does not return to Active Service within said one (1) year period, whether because he was not recalled or was recalled but did not return to Active Service, the Participant shall be considered to have terminated his service as of the last day of Active Service.
(iii)
during any period for which Hours of Service shall be credited pursuant to applicable law.
(d)
Except as provided in (e) below, all or part of the service with an Affiliate, Subsidiary, or Predecessor Corporation, while such entities were members of the same controlled group (as such term is defined in Section 1563 of the Code) immediately preceding Employment with the Employer, shall be counted as Years of Service. Such Years of Service shall be determined in accordance with the provisions of this Section 5.2.
(e)
Unless otherwise required by ERISA, the Administrative Committee may, but shall not be required to, give credit for service with an Affiliate, Subsidiary, or Predecessor Corporation immediately preceding Employment with an Employer under any of the following conditions:
(i)
The Affiliate, Subsidiary, or Predecessor Corporation was not a part of the same controlled group at the time the service was rendered, or
(ii)
The Affiliate, Subsidiary, or Predecessor Corporation maintained a Qualified Plan which required voluntary contributions from an Employee

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as a prerequisite for participation and the Employee elected not to participate, or
(iii)
The Affiliate, Subsidiary, or Predecessor Corporation maintained a Qualified Plan which provided in the terms of such Plan that certain service was not to be counted in determining Years of Service.
(f)
If a Participant was an Employee of the Company, terminated his Employment and is rehired, the following rules shall apply in determining his Years of Service:
(i)
In the case of a Participant who had five (5) or more Years of Service, including the period of a Participant’s service determined in accordance with Section 5.2(a), his Years of Service accrued during his prior period of Employment shall be reinstated as of the date of his re-employment.
(ii)
In the case of a Participant whose Employment terminated before completing five (5) Years of Service, including the period of a Participant’s service determined in accordance with Section 5.2(a), his Years of Service accrued during his prior period of Employment shall be reinstated unless the “Break-in-Service” exceeds the greater of: (i) five (5) years, or (ii) the number of prior Years of Service.
(g)
In no event shall a Participant be deemed to have more than one (1) Year of Service with respect to any Year.
5.3
Rehired Participant .
(a)
In the event a former Employee is hired by an Affiliate or Subsidiary, such former Employee’s years of service with the Affiliate or Subsidiary, while such Affiliate or Subsidiary is a member of the same control group (as such term is defined in Section 1563 of the Code), will be counted in the Plan provided he meets the rule set forth in Section 5.2 above.

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(b)
The prior period of service with an Affiliate or Subsidiary accrued by a Rehired Participant will be reinstated in the Plan as of his date of hire by an Employer provided he meets the rule set forth in Section 5.2 above.


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ARTICLE VI

LIMITATIONS ON BENEFITS
6.1
Defined Benefit Limitations . The limitations of this Article VI shall apply in Limitation Years beginning on or after July 1, 2007, except as otherwise provided herein:
(a)
The Annual Benefit otherwise payable to a Participant at any time will not exceed the Maximum Permissible Benefit. If the benefit the Participant would otherwise accrue in a Limitation Year would produce an Annual Benefit in excess of the Maximum Permissible Benefit, the benefit must be limited (or the rate of accrual reduced) to a benefit that does not exceed the Maximum Permissible Benefit as defined in Section 6.2(i).
(b)
If a Participant is, or has ever been, a participant in more than one defined benefit plan maintained by the Employer, the sum of the Participant’s Annual Benefits from all such plans may not exceed the Maximum Permissible Benefit. Where the Participant’s employer-provided benefits under all defined benefit plans ever maintained by the Employer (determined as of the same age) would exceed the Maximum Permissible Benefit applicable at that age, the Annual Benefit provided under the Plan shall be limited to the extent necessary to prevent the Maximum Permissible Benefit from being exceeded.
(c)
The application of the provisions of this Article VI will not cause the Maximum Permissible Benefit for any Participant to be less than the Participant’s accrued benefit under all the defined benefit plans of the Employer or a Predecessor Employer as of the end of the last Limitation Year beginning before July 1, 2007 under provisions of the plans that were both adopted and in effect before April 5, 2007. The preceding sentence applies only if the provisions of such defined benefit plans that were both adopted and in effect before April 5, 2007 satisfied the applicable requirement of statutory provisions, regulations, and other published guidance relating to Section 415 of the Code in effect as of the end of

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the last Limitation Year beginning before July 1, 2007, as described in Treasury Regulations Section 1.415(a)-1(g)(4).
(d)
If as a result of actuarial increases to the benefit of a Participant who delays commencement of benefits beyond Normal Retirement Age the accrued benefit of such Participant would exceed the limitation under Section 6.1 of the Plan for the Limitation Year, immediately before the actuarial increase to the Participant’s benefit that would cause such Participant’s benefit to exceed the limitations of Section 6.1 of the Plan, payment of benefits to such Participant will be suspended in accordance with Section 8.5 of the Plan, if applicable; otherwise, distribution of the Participant’s benefit will commence.
6.2
Definitions .
(a)
Annual Benefit : A benefit that is payable annually in the form of a straight life annuity. Except as provided below, where a benefit is payable in a form other than a straight life annuity, the benefit must be adjusted to an actuarially equivalent straight life annuity that begins at the same time as such other form of benefit and is payable on the first day of each month, before applying the limitations of this Article VI. For a Participant who has or will have distributions commencing at more than one annuity starting date, the Annual Benefit will be determined as of each such annuity starting date (and will satisfy the limitations of this Article VI as of each such date), actuarially adjusting for past and future distributions of benefits commencing at the other annuity starting dates. For this purpose, the determination of whether a new starting date has occurred shall be made without regarding to Treasury Regulation Section 1.401(a)-20, Q&A 10(d), and with regard to Treasury Regulation Sections 1.415(b)-1(b)(1)(iii)(B) and (C).
No actuarial adjustment to the benefit is required for (a) survivor benefits payable to a surviving spouse under a qualified joint and survivor annuity to the extent such benefits would not be payable if the Participant’s benefit were paid in another form, (b) benefits that are not directly related to retirement benefits (such

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as a qualified disability benefit, pre-retirement incidental death benefits, and post-retirement medical benefits), and (c) the inclusion in the form of benefit of an automatic benefit increase feature, provided the form of benefit is not subject to Section 417(e)(3) of the Code and would otherwise satisfy the limitations of this Article 6, and the Plan provides that the amount payable under the form of benefit in any Limitation Year shall not exceed the limits of this Article VI applicable at the annuity starting date, as increased in subsequent years pursuant to Section 415(d) of the Code. For this purpose, an automatic benefit increase feature is included in a form of benefit if the form of benefit provides for automatic, periodic increases to the benefits paid in that form.
The determination of the Annual Benefit shall take into account Social Security supplements described in Section 411(a)(9) of the Code and benefits transferred from another defined benefit plan, other than transfers of distributable benefits pursuant to Treasury Regulation Section 1.411(d)-4, Q&A-3(c), but shall disregard benefits attributable to Employee contributions or rollover contributions.
Effective for Plan Years beginning after December 31, 2003, the determination of actuarial equivalence of forms of benefit other than a straight life annuity shall be made in accordance with Section 6.2(a)(i) or Section 6.2(a)(ii).
(i)
Benefit forms not subject to Section 417(e)(3): The straight life annuity that is actuarially equivalent to the Participant’s form of benefit shall be determined under this Section 6.2(a)(i) if the form of the Participant’s benefit is either (1) a nondecreasing annuity (other than a straight life annuity) payable for a period of not less than the life of the Participant (or, in the case of a qualified pre-retirement survivor annuity, the life of the surviving spouse), or (2) an annuity that decreases during the life of the Participant merely because of (a) the death of the survivor annuitant (but only if the reduction is not below fifty percent (50%) of the benefit

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payable before the death of the survivor annuitant), or (b) the cessation or reduction of Social Security supplements or qualified disability payments (as defined in Section 401(a)(11) of the Code).
(A)
Limitation Years beginning before July 1, 2007: For Limitation Years beginning before July 1, 2007, the Actuarially Equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit computed using whichever of the following produces the greater annual amounts: (1) the interest rate specified in Section 2.3 of the Plan and the mortality table (or other tabular factor) specified in Section 2.3 of the Plan for adjusting benefits in the same form; and (2) a five percent (5%) interest rate assumption and the applicable mortality table defined in Section 2.3(a) of the Plan for that annuity starting date.
(B)
Limitation Years beginning on or after July 1, 2007. For Limitation Years beginning on or after July 1, 2007, the Actuarially Equivalent straight life annuity is equal to the greater of (1) the annual amount of the straight life annuity (if any) payable to the Participant under the Plan commencing at the same annuity starting date as the Participant’s form of benefit; and (2) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit computed using a five percent (5%) interest rate assumption and the applicable mortality table defined in Section 2.3(a) of the Plan for that annuity starting date.
(ii)
Benefit Forms Subject to Section 417(e)(3): The straight life annuity that is actuarially equivalent to the Participant’s form of benefit shall be

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determined under this paragraph if the form of the Participant’s benefit is other than a benefit form described in Section 6.2(a)(i). In this case, the actuarially equivalent straight life annuity shall be determined as follows:
(A)
Annuity Starting Date in Plan Years Beginning After 2005. If the annuity starting date of the Participant’s form of benefit is in a Plan Year beginning after 2005, the actuarially equivalent straight life annuity is equal to the greatest of (1) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit, computed using the interest rate specified in Section 2.3 of the Plan and the mortality table (or other tabular factor) specified in Section 2.3 of the Plan for adjusting benefits in the same form; (2) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit, computed using a 5.5 percent (5.5%) interest rate assumption and the applicable mortality table defined in Section 2.3(a) of the Plan; and (3) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit, computed using the applicable interest rate defined in Section 2.3(b) of the Plan and the applicable mortality table defined in Section 2.3(a) of the Plan, divided by 1.05.
(B)
Annuity Starting Date in Plan Years Beginning in 2004 or 2005. If the annuity starting date of the Participant’s form of benefit is in a Plan Year beginning in 2004 or 2005, the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of

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benefit, computed using whichever of the following produces the greater annual amount: (1) the interest rate specified in Section 2.3 of the Plan and the mortality table (or other tabular factor) specified in Section 2.3 of the Plan for adjusting benefits in the same form; and (2) a 5.5 percent (5.5%) interest rate assumption and the applicable mortality table defined in Section 2.3(a) of the Plan.
If the annuity starting date of the Participant’s benefit is on or after the first day of the first Plan Year beginning in 2004 and before December 31, 2004, the application of this Section 6.2(a)(ii)(B) shall not cause the amount payable under the Participant’s form of benefit to be less than the benefit calculated under the Plan, taking into account the limitations of this Article, except that the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit, computed using whichever of the following produces the greatest annual amount:
(1)
the interest rate specified in Section 2.3 of the Plan and the mortality table (or other tabular factor) specified in Section 2.3 of the Plan for adjusting benefits in the same form;
(2)
the applicable interest rate defined in Section 2.3(b) of the Plan and the applicable mortality table defined in Section 2.3(a) of the Plan; and
(3)
the applicable interest rate defined in Section 2.3(b) of the Plan (as in effect on the last day of the last Plan Year beginning before January 1, 2004, under provisions of the

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Plan then adopted and in effect) and the applicable mortality table defined in Section 2.3(a) of the Plan.
(b)
Compensation : Compensation is defined as wages, salaries, and fees for professional services and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the Employer maintaining the Plan to the extent that the amounts are includible in gross income (including, but not limited to, commissions paid salespeople, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, and reimbursements, or other expense allowances under a nonaccountable plan (as described in Section 1.62-2(c) of the Treasury Regulations), and excluding the following:
(i)
Employer contributions (other than elective contributions described in Sections 402(e)(3), 408(k)(6), 408(p)(2)(A)(i), or 457(b) of the Code) to a plan of deferred compensation (including a simplified employee pension described in Section 408(k) or a simple retirement account described in Section 408(p) and whether or not qualified) to the extent such contributions are not includible in the Employee’s gross income for the taxable year in which contributed, and any distributions (whether or not includible in gross income when distributed) from a plan of deferred compensation (whether or not qualified);
(ii)
Amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by the Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture;
(iii)
Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option;

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(iv)
Other amounts that receive special tax benefits, such as premiums for group-term life insurance (but only to the extent that the premiums are not includible in the gross income of the Employee and are not salary reduction amounts that are described in Section 125 of the Code); and
(v)
Other items of remuneration that are similar to any of the items listed in (i) through (iv).
For any self-employed individual, Compensation will mean earned income.
Except as provided herein, for Limitation Years beginning after December 31, 1991, Compensation for a Limitation Year is the Compensation actually paid or made available during such Limitation Year.
For Limitation Years beginning after December 31, 1997, Compensation paid or made available during such Limitation Year shall include any elective deferral (as defined in Section 402(g)(3) of the Code), and any amount which is contributed or deferred by the Employer at the election of the Employee and which is not includible in the gross income of the Employee by reason of Section 125 or 457 of the Code. For Limitation Years beginning after December 31, 2000, Compensation shall also include any elective amounts that are not includible in the gross income of the Employee by reason of Section 132(f)(4) of the Code. For Limitation Years beginning on or after December 31, 2008, differential wage payments by the Employers to Participants who are called to active duty, to the extent such payments do not exceed the amounts the Participant would have received if he or she had continued to perform services for the Employer rather than entering qualified military service, are included as Compensation.
For Limitation Years beginning on or after July 1, 2007, Compensation for a Limitation Year shall also include compensation paid by the later of 2½ months after an Employee’s Severance from Employment with the Employer maintaining

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the Plan or the end of the Limitation Year that includes the date of the Employee’s Severance from Employment with the Employer maintaining the Plan, if:
(i)
the payment is regular compensation for services during the Employee’s regular working hours, or compensation for services outside the Employee’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments, and, absent a Severance from Employment, the payments would have been paid to the Employee while the Employee continued in Employment with the Employer.
(ii)
the payment is for unused accrued bona fide sick, vacation or other leave that the Employee would have been able to use if Employment had continued; or
(iii)
the payment is received by the Employee pursuant to a nonqualified unfunded deferred compensation plan and would have been paid at the same time if Employment had continued, but only to the extent includible in gross income.
Any payments not described above shall not be considered Compensation if paid after Severance from Employment, even if they are paid by the later of 2 ½ months after the date of Severance from Employment or the end of the Limitation Year that includes the date of Severance from Employment, except, payments to an individual who does not currently perform services for the Employer by reason of qualified military service (within the meaning of Section 414(u)(1) of the Code) to the extent these payments do not exceed the amounts the individual would have received if the individual had continued to perform services for the Employer rather than entering qualified military service; or (b) compensation paid to a Participant who is permanently and totally disabled, as defined in Section 22(e)(3) of the Code, provided salary continuation applies to all Participants who are permanently and totally disabled for a fixed or determinable period, or the

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Participant was not a highly compensated employee, as defined in Section 414(q) of the Code, immediately before becoming disabled.
Back pay, within the meaning of Treasury Regulations Section 1.415(c)-2(g)(8), shall be treated as compensation for the Limitation Year to which the back pay relates to the extent the back pay represents wages and compensation that would otherwise be included under this definition.
(c)
Defined Benefit Compensation Limitation : One hundred percent (100%) of a Participant’s High Three-Year Average Compensation, payable in the form of a straight life annuity. In the case of a Participant who has had a Severance from Employment with the Employer, the Defined Benefit Compensation Limitation applicable to the Participant in any Limitation Year beginning after the date of severance shall be automatically adjusted by multiplying the limitation applicable to the Participant in the prior Limitation Year by the annual adjustment factor under Section 415(d) of the Code that is published in the Internal Revenue Bulletin. The adjusted compensation limit shall apply to Limitation Years ending with or within the calendar year of the date of the adjustment, but a Participant’s benefits shall not reflect the adjusted limit prior to January 1 of that calendar year.
In the case of a Participant who is rehired after a Severance from Employment, the Defined Benefit Compensation Limitation is the greater of one hundred percent (100%) of the Participant’s High Three-Year Average Compensation, as determined prior to the Severance from Employment, as adjusted pursuant to the preceding paragraph, if applicable; or one hundred percent (100%) of the Participant’s High Three-Year Average Compensation, as determined after the Severance from Employment under Section 6.2(g).
(d)
Defined Benefit Dollar Limitation : $160,000, as automatically adjusted, effective January 1st of each year, under Section 415(d) of the Code in such manner as the Secretary shall prescribe, and payable in the form of a straight life annuity ($200,000 for 2012). The new limitation will apply to Limitation Years ending

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with or within the calendar year of the date of the adjustment. The automatic annual adjustment shall apply to Participants who have had a separation from Employment.
(e)
Employer : For purposes of this article, Employer shall mean the Employer that adopts the Plan, and all members of a controlled group of corporations (as defined in Section 414(b) of the Code, as modified by Section 415(h) of the Code), all commonly controlled trades or businesses (as defined in Section 414(c) of the Code, as modified by Section 415(h) of the Code), or affiliated service groups (as defined in Section 414(m) of the Code) of which the adopting Employer is a part, and any other entity required to be aggregated with the Employer pursuant to Section 414(o) of the Code.
(f)
Formerly Affiliated Plan of the Employer : A plan that, immediately prior to the cessation of affiliation, was actually maintained by the Employer and, immediately after the cessation of the affiliation, is not actually maintained by the Employer. For this purpose, cessation of affiliation means the event that causes an entity to no longer be considered the Employer, such as the sale of a member controlled group of corporations, as defined in Section 414(b) of the Code, as modified by Section 415(h) of the Code, to an unrelated corporation, or that causes a plan to not actually be maintained by the Employer, such as transfer of plan sponsorship outside a controlled group.
(g)
High Three-Year Average Compensation : The average Compensation for the three (3) consecutive years of service (or, if the Participant has less than three (3) consecutive years of service, the Participant’s longest consecutive period of service, including fractions of years, but not less than one year) with the Employer that produces the highest average. A Year of Service is defined in Section 2.51. In the case of a Participant who is rehired by the Employer after a Severance from Employment, the Participant’s High Three-Year Average Compensation shall be calculated by excluding all Years of Service for which the

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Participant performs no services for and receives no Compensation from the Employer (the break period) and by treating the years immediately preceding and following the break period as consecutive. A Participant’s Compensation for a Year of Service shall not include Compensation in excess of the limitation under Section 401(a)(17) of the Code that is in effect for the calendar year in which such Year of Service begins.
(h)
Limitation Year : The Plan Year as defined in Section 2.38.
(i)
Maximum Permissible Benefit : The lesser of the Defined Benefit Dollar Limitation or the Defined Benefit Compensation Limitation (both adjusted where required, as provided below).
(i)
If the Participant has less than 10 Years of Participation in the Plan, the Defined Benefit Dollar Limitation shall be multiplied by a fraction -- (i) the numerator of which is the number of years (or part thereof, but less than one year) of participation in the Plan, and (ii) the denominator of which is 10. In the case of a Participant who has less than 10 Years of Service with the Employer, the Defined Benefit Compensation Limitation shall be multiplied by a fraction -- (i) the numerator of which is the number of Years (or part thereof, but not less than one year) of Service with the Employer, and (ii) the denominator of which is 10.
(ii)
Effective for benefits commencing in Limitation Years ending after December 31, 2001, the Defined Benefit Dollar Limitation shall be adjusted if the annuity starting date of the Participant’s benefit is before age 62 or after age 65. If the annuity starting date is before age 62, the Defined Benefit Dollar Limitation shall be adjusted under Section 6.2(i)(ii)(A), as modified by Section 6.2(i)(ii)(C)). If the annuity starting date is after age 65, the Defined Benefit Dollar Limitation shall be adjusted under Section 6.2(i)(ii)(B), as modified by Section 6.2(i)(ii)(C).

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(A)
Adjustment of Defined Benefit Dollar Limitation for Benefit Commencement Before Age 62:
(1)
Limitation Years Beginning Before July 1, 2007. If the annuity starting date for the Participant’s benefit is prior to age 62 and occurs in a Limitation Year beginning before July 1, 2007, the Defined Benefit Dollar Limitation for the Participant’s annuity staring date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the Participant’s annuity starting date that is the actuarial equivalent of the Defined Benefit Dollar Limitation (adjusted under Section 6.2(i)(i) for Years of Participation less than 10, if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount: (i) the interest rate specified in Section 2.3 of the Plan and the mortality table (or other tabular factor) specified in Section 2.3 of the Plan; or (2) a five percent (5%) interest rate assumption and the applicable mortality table as defined in Section 2.3(a) of the Plan.
(2)
Limitation Years Beginning on or After July 1, 2007. If the annuity starting date for the Participant’s benefit is prior to age 62 and occurs in a Limitation Year beginning on or after July 1, 2007, and the Plan does not have an immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement, the Defined Benefit Dollar Limitation for the Participant’s annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the Participant’s annuity starting date that this the

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actuarial equivalent of the Defined Benefit Dollar Limitation (adjusted under Section 6.2(i)(i) for Years of Participation less than 10, if required) with actuarial equivalence computed using a five percent (5%) interest rate assumption and the applicable mortality table for the annuity starting date as defined in Section 2.3(a) of the Plan (and expressing the Participation’s age based on completed calendar months as of the annuity starting date).
(B)
Adjustment of Defined Benefit Dollar Limitation for Benefit Commencement After Age 65:
(1)
Limitation Years Beginning Before July 1, 2007. If the annuity starting date for the Participant’s benefit is after age 65 and occurs in a Limitation Year beginning before July 1, 2007, the Defined Benefit Dollar Limitation for the Participant’s annuity staring date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the Participant’s annuity starting date that is the actuarial equivalent of the Defined Benefit Dollar Limitation (adjusted under Section 6.2(i)(i) for Years of Participation less than 10, if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount: (i) the interest rate specified in Section 2.3 of the Plan and the mortality table (or other tabular factor) specified in Section 2.3 of the Plan; or (2) a five percent (5%) interest rate assumption and the applicable mortality table as defined in Section 2.3(a) of the Plan.

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(2)
Limitation Years Beginning on or After July 1, 2007. If the annuity starting date for the Participant’s benefit is after age 65 and occurs in a Limitation Year beginning on or after July 1, 2007, and the Plan does not have an immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement, the Defined Benefit Dollar Limitation for the Participant’s annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the Participant’s annuity starting date that this the actuarial equivalent of the Defined Benefit Dollar Limitation (adjusted under Section 6.2(i)(i) for Years of Participation less than 10, if required) with actuarial equivalence computed using a five percent (5%) interest rate assumption and the applicable mortality table for the annuity starting date as defined in Section 2.3(a) of the Plan (and expressing the Participation’s age based on completed calendar months as of the annuity starting date).
(C)
Notwithstanding the other requirements of this Section 6.2(i)(ii), no adjustment shall be made to the Defined Benefit Dollar Limitation to reflect the probability of a Participant’s death between the annuity starting date and age 62, or between age 65 and the annuity starting date, as applicable, if benefits are not forfeited upon the death of the Participant prior to the annuity starting date. To the extent benefits are forfeited upon death before the annuity starting date, such an adjustment shall be made. For this purpose, no forfeiture shall be treated as occurring upon the Participant’s death if the Plan does not charge Participants for

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providing a qualified pre-retirement survivor annuity, as defined in Section 417(c) of the Code, upon the Participant’s death.
(iii)
Minimum benefit permitted: Notwithstanding anything else in this Article VI to the contrary, the benefit otherwise accrued or payable to a Participant under the Plan shall be deemed not to exceed the Maximum Permissible Benefit if:
(A)
the retirement benefits payable for a Limitation Year under any form of benefit with respect to such Participant under the Plan and under all other defined benefit plans (regardless of whether terminated) ever maintained by the Employer do not exceed $10,000 multiplied by a fraction—(i) the numerator of which is the Participant’s number of Years of Service or parts thereof but not less than one year (not to exceed 10) with the Employer, and (ii) the denominator of which is 10; and
(B)
the Employer (or a Predecessor Employer) has not at any time maintained a defined contribution plan in which the Participant participated (for this purpose, mandatory employee contributions under a defined benefit plan, individual medical accounts under Section 401(h), and accounts for postretirement medical benefits established under Section 419A(d)(1) of the Code are not considered a separate defined contribution plan).
(j)
Predecessor Employer : If the Employer maintains a plan that provides a benefit which the Participant accrued while performing services for a former employer, the former employer is a predecessor employer with respect to participation in the Plan. A former entity that antedates the Employer is also a Predecessor Employer with respect to a Participant if, under the facts and circumstances, the Employer constitutes a continuation of all or a portion of the trade or business of the former entity.

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(k)
Severance from Employment : An Employee has a severance from employment when the Employee ceases to be an Employee of the Employer maintaining the Plan. An Employee does not have a Severance from Employment if, in connection with a change of Employment, the Employee’s new employer maintains the Plan with respect to the Employee.
(l)
Year of Participation : The Participant shall be credited with a Year of Participation (computed to fractional parts of a year) for each accrual computation period for which the following conditions are met: (1) the Participant is credited with at least the number of Hours of Service for benefit accrual purposes, required under the terms of the Plan in order to accrue a benefit for the accrual computation period, and (2) the Participant is included as a Participant under the eligibility provisions of the Plan for at least one day of the accrual computation period. If these two conditions are met, the portion of a Year of Participation credited to the Participant shall equal the amount of benefit accrual service credited to the Participant for such accrual computation period. A Participant who is permanently and totally disabled within the meaning of Section 415(c)(3)(c)(i) of the Code for an accrual computation period shall receive a Year of Participation with respect to that period. In addition, for a Participant to receive a Year of Participation (or part thereof) for an accrual computation period, the Plan must be established no later than the last day of such accrual computation period. In no event will more than one Year of Participation be credited for any twelve (12) month period.
(m)
Year of Service : For purposes of Article VI, the Participant shall be credited with a Year of Service (computed to fractional parts of a year) for each accrual computation period for which the Participant is credited with at least the number of Hours of Service for benefit accrual purposes, required under the terms of the Plan in order to accrue a benefit for the accrual computation period, taking into account only service with the Employer or Predecessor Employer.
6.3
Funding-Based Limits.

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Notwithstanding any other provision of the Plan to the contrary, no benefit shall accrue under or be paid from the Plan, and no amendment increasing liability for benefits shall take effect, to the extent that such accrual, payment or amendment is prohibited by Section 206(g) of ERISA or Section 436 of the Code (or any successor provisions thereto) as interpreted by applicable regulatory guidance. No Employer or Affiliate shall be required to (i) make additional contributions, (ii) provide security to the Plan, or (iii) alter the method or timing of any actuarial valuation in order to avoid or reduce the application of such prohibition. Except to the extent required by law, the Plan shall not restore any benefits that did not accrue and shall not make any payment in lieu of any benefits that are not paid by reason of this Section 6.3, and any amendment that does not take effect by reason of this Section 6.3 shall be null and void, and shall not become effective unless readopted by the Employer.




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ARTICLE VII

CREDITED SERVICE
7.1
Determination of Credited Service . A Participant’s Credited Service shall be determined in accordance with the following:
(a)
For a Participant as of the Effective Date, who had been covered under the prior provisions of the Plan, the Participant’s Credited Service shall be determined in accordance with the provisions of the Plan in effect prior to the Effective Date.
(b)
Subject to Section 7.1(a), a Full-Time Employee shall accrue a full Year of Credited Service for each calendar year in which he is an Employee eligible to participate in the Plan under Section 3.1. In the year in which a Full-Time Employee is hired or terminated, the Participant shall be deemed to complete one/twelfth (1/12) of a year of Credited Service for each month employed, rounded to the nearest month. A Part-Time Employee shall be deemed to complete one/twelfth (1/12) of a year of Credited Service for each one hundred seventy-three and one/third (1731/3) Hours of Service completed while employed as a Part-Time Employee. For the year in which, with respect to a Participant, benefit accruals cease pursuant to the provisions of Section 4.2(d) or (e) or (g), a Participant who is a Full-Time Employee shall be deemed to complete one-twelfth (1/12) of a year of Credited Service for each month employed through the effective date of the cessation of benefit accruals, and no Participant described in Section 4.2(d) or (e) or (g) shall accrue additional Credited Service for periods thereafter.
(c)
Credited Service will not include a period of time a Participant is on an Authorized Leave of Absence for other than medical or military reasons, is on layoff status or while employed with an Affiliate or Subsidiary which is not an Employer.

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(d)
Prior Service with a Predecessor Corporation may, at the discretion of the Administrative Committee, be deemed to be Credited Service.
(e)
In the event a Participant who has completed ten (10) or more Years of Service becomes a Disabled Participant, the period of disability up to the Participant’s Normal Retirement Date shall be counted as Credited Service regardless of whether the Participant remains in the employ of an Employer.
(f)
A Participant shall in no event be deemed to accrue more than one (1) full Year of Credited Service with respect to any Year.
(g)
If the Participant was an Employee of the Employer, terminated his Employment and is rehired, the following rules shall apply in determining his Credited Service:
(i)
In the case of a Participant who had five (5) or more Years of Service or who terminated Employment after his Normal Retirement Date, his Credited Service accrued during his prior period of Employment shall be reinstated as of the date of his re-employment.
(ii)
In the case of a Participant whose Employment terminated before completing five (5) Years of Service and before his Normal Retirement Date, his Years of Credited Service accrued during his prior period of Employment shall be reinstated unless the “Break-in-Service” exceeds the greater of: (i) five (5) years, or (ii) the number of prior Years of Service.
(h)
Years of Service with an Affiliate or Subsidiary which does not participate in the Plan will not be included as Credited Service.
(i)
Notwithstanding any other provision of this Section 7.1, Years of Service or other periods of employment with a Strategic Business Unit whose employees are not active Participants accruing benefits under Section 4.2 will not be included as Credited Service.


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ARTICLE VIII

PAYMENT OF RETIREMENT BENEFITS
8.1
Normal Form of Payment . The retirement income to which a Participant may be entitled at his Normal Retirement Date shall be payable in the following method unless the Participant elects one of the optional forms of payment provided for in Section 8.2.
(a)
The retirement income payable to a Participant who does not have an Eligible Spouse on the date payments commence shall be in the form of a lifetime income amount calculated in accordance with Section 4.2.
(b)
The retirement income payable to a Participant who has an Eligible Spouse on the date payments commence shall be in the form of a Surviving Spouse Option with his Eligible Spouse as the survivor, subject to the following:
(i)
Under a Surviving Spouse Option, a reduced amount shall be paid to the Participant for his lifetime, and his Eligible Spouse, if surviving at the Participant’s death, shall be entitled to receive thereafter a lifetime benefit equal to fifty percent (50%) of the reduced benefit which had been payable to the Participant. The amount of the reduced benefit payable to the Participant and Survivor shall be the Actuarial Equivalent of the lifetime benefit as determined in Section 4.2.
(ii)
Within the twelve (12) month period prior to his Normal Retirement Date, or at the time he applies for retirement income payments to commence, if earlier, or if requested by the Participant eligible for Early Retirement, each Participant must certify to the Administrative Committee, on a form and in a manner prescribed by the Administrative Committee whether or not he is married, and if so, the name and date of birth of the person to whom he is married and the date of the marriage. The Participant will notify the Administrative Committee of any changes in his status prior to retirement.





(iii)
Within a reasonable period (but in no event more than 180 days prior to the annuity starting date) following receipt of the certification specified in (ii) above, from a Participant who certifies that he will be married at the time his retirement income payments are to commence, the Administrative Committee shall furnish him a written explanation of the Surviving Spouse Option and an estimate of the amounts of retirement income payable both under that option and all other options. Such explanation shall include a description of how much larger benefits will be if the commencement of distributions is deferred.
(iv)
At the time such explanation is furnished to the Participant, an election form will also be furnished to him. The Participant must complete such form and return it to the Administrative Committee within the 180-day period ending on the date as of which his retirement income payments are to commence. The Participant may elect to waive the otherwise applicable election period described above and commence distribution of his benefit on a date that is more than seven (7) days after the election form is furnished to him. The election form shall allow the Participant to elect (a) to revoke the Surviving Spouse Option or (b) to elect to be covered under the option, in which case he must submit satisfactory proof of the date of his spouse’s birth and of their marriage if such has not previously been submitted to the Administrative Committee. A Participant who fails to so complete and return the election form in a timely manner shall be deemed to have elected to be covered under the Surviving Spouse Option.
(v)
If a Participant revokes the Surviving Spouse Option, he may nevertheless cancel such revocation at any time prior to the first (1st) day of the month for which his retirement income payments are to commence by completing the appropriate form and submitting it to the Administrative Committee; otherwise retirement income shall be paid in the form of a lifetime income unless an optional form is elected in accordance with Section 8.3. If a

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married Participant revokes the Surviving Spouse Option, he must provide spousal consent for such revocation. The spouse’s consent to revoke the Surviving Spouse Option must be either witnessed by a Plan representative or notarized by a Notary of the Public.
(vi)
If a vested Participant who has not revoked the Surviving Spouse Option dies on or after his Early Retirement Date, he will be deemed to have retired on the first (1st) day of the month coincident with or following the date of his death or retirement, whichever occurs first, and retirement income shall be paid to his Eligible Spouse in the form of a Surviving Spouse Option.
(vii)
If a vested Participant who has not revoked the Surviving Spouse Option dies before his Early Retirement Date, he will be deemed to have:
(A)
terminated Employment on the date of death (unless he had terminated Employment prior to his death),
(B)
survived to this Early Retirement Date, and
(C)
retired with an immediate Surviving Spouse Option.
The amount of the retirement income payable to the Eligible Spouse for life shall be equal to fifty percent (50%) of the amount the Participant would have received had he survived to elect an Early Retirement Date in accordance with (i) and (ii) above. Payment to the Eligible Spouse of a deceased Participant is to commence with the month in which the Participant would have reached his Early Retirement Date.
(viii)
Subject to retroactive payment thereof, any retirement income payments otherwise due under the Plan may be delayed until thirty (30) days after the latest of whichever of the following are applicable:

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(A)
The receipt by the Administrative Committee of the certification specified in (ii) above;
(B)
The receipt by the Administrative Committee of the completed election form furnished in accordance with (iv) above; or
(C)
The receipt by the Administrative Committee of satisfactory proof of the marriage and date of birth of the Eligible Spouse of a Participant who elects or is deemed to have elected the Surviving Spouse Option.
(ix)
The election of the Surviving Spouse Option shall be null and void if the Participant’s spouse should die within thirty (30) days after the latest date on which the Participant may make a timely return of the election form pursuant to (iv) above.
8.2
Optional Forms of Payment . A Participant may elect, at any time prior to 180 days preceding the commencement of his retirement income, by giving written notice on a form and in a manner prescribed by the Administrative Committee, to convert the amount of retirement income payable to him under the normal form of payment into the Actuarial Equivalent under one of the following options:
(a)
Lifetime Income Option . Under this option retirement income will cease at the death of the Participant.
(b)
Joint and Survivor Option . Under this option, a Participant can elect to receive a reduced income, but after the Participant’s death, fifty percent (50%), seventy-five percent (75%) or one hundred percent (100%) (depending upon the election made) of such reduced income shall be paid for life to his Eligible Spouse or his designated Joint Annuitant.
(c)
Ten (10) Year Certain Option . Under this option, the Participant can elect to receive a reduced income, but in the event of his death prior to one hundred

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twenty (120) months after retirement income payments commence, the same reduced income shall be paid for the remainder of the one hundred twenty (120) months to his designated Beneficiary.
(d)
Level Income Option . A Participant electing an Early Retirement Date which is prior to the date when he is eligible to receive Social Security benefits may elect to receive an increased monthly payment from the Plan continuing until he is eligible to receive Social Security Benefits, whereupon his monthly payment from the Plan will be decreased. The amount of increase and decrease will be determined in accordance with appropriate Actuarial Equivalent factors based on the Participant’s expected Social Security Benefits as of his Early Retirement Date so that his total monthly retirement income from this retirement date shall be approximately level.
In the event of the election of this Level Income Option, the monthly payment of the retirement income shall commence at the date of retirement and shall cease with the last payment prior to the death of the Participant.
8.3
Election Procedure .
(a)
An election may not be made nor will it be accepted by the Administrative Committee, or if accepted it shall become null and void, if the Participant’s Employment terminates prior to his Early Retirement Date.
(b)
If a Participant shall validly elect a Surviving Spouse Option or a Joint and Survivor Option and shall retire on an Early or Normal Retirement Date, his election shall be effective on such retirement date, provided both the Participant and Joint Annuitant are then alive. If the Joint Annuitant shall die before such retirement date, the election shall be of no effect.
(c)
If a Participant shall elect a Surviving Spouse Option or a Joint and Survivor Option and shall remain in the service of the Company after his Normal

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Retirement Date, his election shall nevertheless become effective on his Normal Retirement Date provided, however,
(i)
if his Joint Annuitant dies before such Participant retires, such Participant shall be entitled after retiring to receive only the reduced retirement income payable to him in accordance with such option; and
(ii)
if such Participant dies before retiring, his Joint Annuitant shall receive the reduced income which would be payable to such Joint Annuitant in accordance with such option, as if such Participant had retired on the first day of the month coinciding with or next preceding his date of death.
(d)
If a Participant shall elect a Surviving Spouse Option or a Joint and Survivor Option and his Joint Annuitant shall die before the death of, but after the retirement of, the Participant, such Participant shall continue to receive the reduced retirement income payable to him in accordance with such option.
(e)
If a Participant shall validly elect a ten (10) year certain option and shall remain in the service of the Company after his Normal Retirement Date, and if such Participant shall die before retiring, his Beneficiary shall receive the reduced retirement income for the guaranteed period elected in accordance with this option as if the Participant had retired on the first day of the month coinciding with or next preceding his date of death.
(f)
Notwithstanding anything to the contrary contained herein, if the Joint Annuitant is other than the Participant’s Eligible Spouse, the present value of the payments made and to be made to a Participant under any of the optional forms of income cannot be less than fifty percent (50%) of the present value of the total payments to be made to the Participant and his Joint Annuitant. In such event, the optional form elected shall be adjusted to satisfy the fifty percent (50%) requirement referred to above.
8.4
Minimum Required Distributions .

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(a)
The distribution of benefits shall be made in accordance with Section 401(a)(9) of the Code and Treasury Regulations issued thereunder on June 15, 2004.
(i)
Determination of Amount to be Distributed Each Year.
(A)
General Annuity Requirements. If a Participant’s benefit is paid in the form of an annuity, payments under the annuity shall satisfy the following requirements:
(1)
The annuity distributions shall be paid in periodic payments made at intervals not longer than one year;
(2)
The distribution period shall be over a life (or lives) or over a period certain not longer than the period described in subsection (b) or (c); and
(3)
Payments shall either be nonincreasing or increase only as permitted under Q&A-14 of Regulation section 1.401(a)(9)-6.
(B)
Amount Required to be Distributed by Required Beginning Date. The amount that must be distributed on or before the Participant’s Required Beginning Date (or, if the Participant dies before distributions begin, the date distributions are required to begin under subsection (c)(v) is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bi-monthly, monthly, semi-annually, or annually. All of the Participant’s benefit accruals as of the last day of the first Distribution Calendar Year shall be included in the calculation of the amount of the annuity payments for

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payment intervals ending on or after the Participant’s Required Beginning Date.
(C)
Additional Accruals after First Distribution Calendar Year. Any additional benefits accruing to the Participant in a calendar year after the first Distribution Calendar Year shall be distributed beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues.
(ii)
Requirement for Joint Life Annuities that Commence During Participant’s Lifetime Where the Co-Annuitant is not the Participant’s Spouse. If the Participant’s benefit is being distributed in the form of a survivor annuity for the joint lives of the Participant and a non-spouse co-annuitant, annuity payments to be made on or after the Participant’s Required Beginning Date to such co-annuitant after the Participant’s death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the Participant using the table set forth in Q&A-2 of Regulation section 1.401(a)(9)-6. The applicable percentage is based on the adjusted Participant/co-annuitant age difference. The adjusted Participant/co annuitant age difference is determined by first calculating the excess of the age of the Participant over the age of the co-annuitant based on their ages on their birthdays in a calendar year. If the Participant is younger than age 70, the age difference determined in the previous sentence is reduced by the number of years that the Participant is younger than age 70 on the Participant’s birthday in the calendar year that contains the Benefit Commencement Date. In the case of an annuity that provides for increasing payments, the requirement of this subsection (ii) will not be violated merely because benefit payments to the co-annuitant increase, provided the increase is determined in the same manner for the Participant and the co-annuitant.

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(iii)
Requirements for Minimum Distributions Where Participant Dies Before Date Distributions Begin.
(A)
Participant Survived by Designated Beneficiary. Except as provided in subsection (b), if the Participant dies before the date distribution of his or her benefit begins and there is a Designated Beneficiary, the Participant’s benefit shall be distributed, beginning no later than the time described in subsection (c)(v), over the life of the Designated Beneficiary or over a period certain not exceeding:
(1)
Unless the Benefit Commencement Date is before the first Distribution Calendar Year, the Life Expectancy of the Designated Beneficiary determined using the Designated Beneficiary’s age as of the Designated Beneficiary’s birthday in the calendar year immediately following the calendar year of the Participant’s death; or
(2)
If the Benefit Commencement Date is before the first Distribution Calendar Year, the Life Expectancy of the Designated Beneficiary determined using the Designated Beneficiary’s age as of the Designated Beneficiary’s birthday in the calendar year that contains the Benefit Commencement Date.
(B)
No Designated Beneficiary. If the Participant dies before the date distributions begin and there is no Designated Beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of the Participant’s entire vested benefit shall be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

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(C)
Death of Surviving Spouse Before Distributions to Surviving Spouse Begin. If the Participant dies before the date distribution of his or her vested benefit begins, the Participant's surviving spouse is the Participant’s sole Designated Beneficiary, and the surviving spouse dies before distributions to the surviving spouse begin, this subsection shall apply as if the surviving spouse were the Participant, except that the time by which distributions must begin will be determined without regard to subsection (c)(v)(A).
(iv)
Minimum Required Distributions Made or Commencing Prior to January 1, 2003. Notwithstanding anything in the Plan to the contrary, the distribution of benefits under the Plan shall be made in accordance with Section 401(a)(9) of the Code and the Regulations, including the minimum distribution incidental benefit requirement of Regulation section 1.401(a)(9)-2. Distributions made or commencing under this subsection to a Participant who has not yet terminated employment with the Employer shall be limited to the minimum required distributions pursuant to Section 401(a)(9) of the Code as in effect on December 31, 1995. The Plan Administrator shall adopt appropriate rules to reduce the benefits paid under the Plan after the Participant terminates employment in order to reflect the distributions made while the Participant was still employed.
(b)
Elections.
(i)
Election to Apply 5-Year Rule to Distributions to Designated Beneficiaries. If the Participant dies before distributions begin and there is a Designated Beneficiary, distribution to the Designated Beneficiary is not required to begin by the date specified in subsection (c)(v), but the Participant’s entire vested interest in the Plan shall be distributed to the Designated Beneficiary by December 31 of the calendar year containing the fifth anniversary of the Participant’s death. Participants or Designated

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Beneficiaries may elect on an individual basis whether the 5-year rule or the life expectancy rule in subsection (a)(iii) applies to distributions after the death of a Participant who has a Designated Beneficiary. The election must be made no later than the earlier of September 30 of the calendar year in which distribution would be required to begin under subsection (c)(iv), or by September 30 of the calendar year which contains the fifth anniversary of the Participant’s (or, if applicable, surviving spouse’s) death. If neither the Participant nor Designated Beneficiary makes an election under this subsection, distributions shall be made in accordance with subsection (a)(iii). If the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary and the surviving spouse dies after the Participant but before distributions to either the Participant or the surviving spouse begin, this election shall apply as if the surviving spouse were the Participant.
(ii)
Election to Allow Designated Beneficiary Receiving Distributions Under 5-Year Rule to Elect Life Expectancy Distributions. A Designated Beneficiary who is receiving payments under the 5 year rule described in subsection (a) above may make a new election to receive payments under the life expectancy rule until December 31, 2003, provided that all amounts that would have been required to be distributed under the life expectancy rule for all Distribution Calendar Years before 2004 are distributed by the earlier of December 31, 2003 or the end of the 5-year period.
(iii)
Election under TEFRA Section 242(b)(2). Notwithstanding any provision in this Article VIII to the contrary, distributions under the Plan may be made under a designation made before January 1, 1984, in accordance with Section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA).

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(c)
Definitions. For purposes of this Article, the following rules and definitions shall apply:
(i)
“Designated Beneficiary” means the individual who is designated as the Beneficiary under the Plan and is the Designated Beneficiary under Section 401(a)(9) of the Code and Section 1.401(a)(9)-1, Q&A-4 of the Treasury Regulations.
(ii)
“Distribution Calendar Year” means a calendar year for which a minimum distribution is required. For distributions beginning before the Participant’s death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year that contains the Participant’s Required Beginning Date. For distributions beginning after the Participant’s death, the first Distribution Calendar Year is the calendar year in which distributions are required to begin under subsection (v) below.
(iii)
“Life Expectancy” means life expectancy as computed by use of the Single Life Table in Regulation section 1.401(a)(9)-9.
(iv)
“Required Beginning Date” means:
(A)
April 1 of the calendar year following the calendar year in which the Participant attains age 70½ or, if later, April 1 of the calendar year following the calendar year in which the Participant terminates employment with the Employer; and
(B)
April 1 of the calendar year following the calendar year in which the Participant attained age 70½ in the case of a Participant who attained age 70½ prior to 1999.
(i)
Commencement Date in the Event of Death of Participant Before Distributions Begin. If a Participant dies before distributions begin, the

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Participant’s death benefit shall be distributed, or begin to be distributed, no later than as follows:
(A)
If in the form of a Qualified Pre-retirement Survivor Annuity, Distributions to a surviving spouse shall begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70-1/2, if later.
(B)
Distributions to a beneficiary other than a surviving spouse or to the surviving spouse in a form other than the Qualified Pre-retirement Survivor Annuity shall begin by December 31 of the calendar year immediately following the calendar year in which the Participant died.
8.5
Suspension of Benefits .
(a)
Reemployment Prior to Normal Retirement Age . If a retired Participant is again employed by the Employer prior to his Normal Retirement Age, his retirement income hereunder shall be suspended during the period of such reemployment and the retirement income to which he is entitled when he again retires hereunder shall be actuarially adjusted to take account of any benefit payments previously received by the Participant. To determine the adjustment, the present value of the benefits already paid will be converted to an annuity payable in the automatic form of payment for an unmarried Participant at Normal Retirement Date and subtracted from the Accrued Benefit so determined under Section 4.2 without regard to the prior benefit payments. In no event, however, may the benefit be less than his original retirement benefit. If such benefits have been paid in a lump sum in accordance with the terms of the Plan and if the Participant is subsequently reemployed by the Employer, he shall not accrue any benefits for service prior to his reemployment date unless such lump sum is repaid to the Trust Fund, with interest at five percent (5%) per annum.

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(b)
Continued Employment after Normal Retirement Date . Subject to the mandatory commencement provisions, if a Participant postpones his or her retirement beyond his or her Normal Retirement Age, the payment of such Participant’s retirement benefit shall be suspended during each calendar month in which the Participant completes forty (40) or more Hours of Service (except for Hours of Service credited as a result of back pay) for the Employer or Affiliate.
(c)
Notice of Suspension of Benefits . During the first calendar month in which a Participant’s benefits are suspended under the above paragraph (b) of this Section 8.5, the Administrative Committee shall deliver to the Participant, by personal delivery or first class mail, a notice setting forth the following:
(i)
a description of the specific reasons why benefit payments are being suspended;
(ii)
a general description of the Plan provisions relating to the suspension of benefits;
(iii)
a copy of the Plan provisions relating to the suspension of benefits;
(iv)
the statement that “Applicable Department of Labor Regulations may be found in Section 2530.203-3 of the Code of Federal Regulations”;
(v)
a description of the procedures set forth in the Plan for obtaining a review of the suspension of benefits; and
(vi)
a description of any notice procedure (including any forms which must be filed by the Participant) as a prerequisite for the Participant’s obtaining the resumption of benefit payments.
If the Administrative Committee intends to offset any amounts previously received by a Participant during periods when such benefits should have been suspended against any future benefits to be received by the Participant, the notice shall also set forth the periods of employment which gave rise to the offset, the

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suspendible amounts which are subject to offset, and the manner in which the Administrative Committee intends to offset the suspendible amounts.
In no event shall the amount of benefits offset by the Administrative Committee in any month exceed twenty-five percent (25%) of the benefits to which a Participant would have been entitled but for the offset.
(d)
Resumption of Benefits . If, during a calendar month, a Participant’s benefit payments are no longer suspendible pursuant to Section 8.5(b), the benefit payments to the Participant shall resume no later than the first (1st) day of the third (3rd) calendar month after such calendar month. The initial payment upon resumption shall include the payment scheduled to occur in the calendar month when payments resume and any amounts withheld during the period between the cessation of employment and the resumption of payments, less any offset for payment when benefits should have been suspended.
(e)
Procedure for Review of Suspension of Benefits . If a Participant submits a written request to the Administrative Committee for a review of the suspension of his or her benefits, such request shall be deemed to be a request for a review of the denial of a claim for benefits for purposes of the benefit claims procedure set forth in Section 9.4.
(f)
Procedure for Status Determination . If a Participant submits a written request to the Administrative Committee for a determination whether specific contemplated employment will result in the suspension of benefits, the Administrative Committee shall, within thirty (30) days of the receipt of such request, notify the Participant in writing whether said employment will result in suspension of benefits.
8.6
Direct Rollovers .
(a)
Notwithstanding any provisions of the Plan to the contrary that would otherwise limit a distributee’s election under this Section, a distributee may elect, at the time

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and in the manner prescribed by the Administrative Committee, to have any portion of an “eligible rollover distribution” paid directly to an eligible retirement plan specified by the distributee in a direct rollover.
(b)
Definitions .
(i)
“Eligible rollover distribution”: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period of ten (10) years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; a hardship distribution; or the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities), except that an eligible rollover distribution shall include the portion that is not includable in gross income if the distribution is transferred in a direct trustee-to-trustee transfer to an individual retirement account or annuity described in Section 408(a) of (b) of the Code, a qualified defined benefit or defined contribution plan described in Section 401(a) or 403(a) of the Code, or an annuity contract described in Section 403(b) of the Code, which agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includable in gross income and the portion of such distribution which is not includable.
(ii)
“Eligible retirement plan”: An eligible retirement plan is an individual retirement account described in Section 408(a) of the Code, and individual

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retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, an annuity contract described in Section 403(b) of the Code, a qualified trust described in Section 401(a) of the Code, or an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state that accepts the distributee’s eligible rollover distribution and agrees to separately account for amounts transferred into such plan from the Plan., or to a Roth IRA described in Section 408A(b) of the Code. The definition of an eligible retirement plan shall also apply in the case of a distribution to a surviving spouse or former spouse who is the alternate payee under a qualified domestic relations order as defined in Section 414(p) of the Code.
(iii)
“Distributee”: A distributee includes an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving spouse and the Employee’s or former Employee’s spouse or former spouse who is the alternate payee under a qualified domestic relations order (qdro), as defined in Section 414(p) of the Code, are distributees without regard to the interest of the spouse or former spouse. A distribute also includes the Participant’s nonspouse designated Beneficiary. In the case of a nonspouse beneficiary, the direct rollover may be made only to an individual retirement account or annuity described in Section 408(a) or Section 408(b) (“IRA”) that is established on behalf of the designated beneficiary and that will be treated as an inherited IRA pursuant to the provisions of Section 402(c)(11). Also, in this case, the determination of any required minimum distribution under Section 401(a)(9) of the Code that is ineligible for rollover shall be made in accordance with Notice 2007-7, Q&A 17 and 18.

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(iv)
“Direct rollover”: A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee.
(v)
“Non-Spousal Rollovers”: A distributee who is a designed beneficiary (as defined in Section 401(a)(9)(E) of the Code) of a deceased Participant and who is not the deceased Participant’s surviving Spouse (a “nonspousal beneficiary”) may elect, at the time and in the manner prescribed by the Administrator, to have any amount payable to him or her paid directly in a direct rollover. The amount to be distributed in the direct rollover must satisfy all of the requirements to be an eligible rollover distribution other than the requirement that the distribution be made to the Participant or the Participant’s Eligible Spouse and must be paid in a direct trustee-to-trustee transfer to an individual retirement plan described in Section 402(c)(8)(B)(i) or (ii) of the Code that is established for the purposes of receiving the distribution on behalf of the nonspousal beneficiary.




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ARTICLE IX

ADMINISTRATION
9.1
Administrative Committee . All usual and reasonable expenses of the Administrative Committee will be paid by the Employer. No member of the Administrative Committee shall receive any compensation for his service on the Administrative Committee.
9.2
Agents of the Administrative Committee . The Administrative Committee may: elect a secretary who may, but need not, be one of the members of the Administrative Committee; appoint from their number such committees with such powers as they shall determine; authorize one or more of the members, or any agent, to execute or deliver any instrument or to make any payment on their behalf; and employ counsel, agents, and such clerical, accounting and actuarial services as they might require in carrying out the provisions of the Plan.
9.3
Procedures . The Administrative Committee may from time to time establish rules and procedures for the administration of the Plan. All rules, procedures and decisions of the Administrative Committee shall be uniformly and consistently applied to all Participants in similar circumstances. Such rules, procedures and decisions so made shall be conclusive and binding on all persons having an interest in the Plan.
9.4
Claims Procedures . The Office of the Senior Vice President Human Resources (the “Claims Administrator”) shall make all initial determinations as to the right of any person to a benefit. If any application for payment of a benefit under the Plan shall be denied, the Claims Administrator shall notify the claimant within ninety (90) days of such application setting forth the specific reasons therefor and shall afford such claimant a reasonable opportunity for a full and fair review of the decision denying his or her claim. If special circumstances require an extension of time for processing the claim, the claimant will be furnished with a written notice of the extension prior to the termination of the initial ninety (90) day period. In no event shall such extension exceed a period of ninety (90) days from the end of such initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Claims Administrator expects to render its decision. The Claims Administrator may

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delegate initial determinations as to the right of any person to a benefit to a member of his or her staff.
The notice of the initial denial shall set forth, in addition to the specific reasons for the denial, the following:
(a)
reference to pertinent provisions of the Plan;
(b)
such additional information as may be relevant to the denial of the claim;
(c)
an explanation of the claims review procedure; and
(d)
notice that such claimant may request the opportunity to review pertinent Plan documents and submit a statement of issues and comments.
Within sixty (60) days following notice of denial of his or her claim, upon written request made by any claimant for a review of such denial to the Senior Vice President Human Resources (or such other member of the Administrative Committee designated by it to hear the appeal), the Senior Vice President Human Resources shall take appropriate steps to review the denial in light of any further information or comments submitted by such claimant.
The Senior Vice President Human Resources shall render a decision within sixty (60) days after the claimant’s request for review and shall advise said claimant in writing of the decision on such review, specifying reasons and identifying appropriate provisions of the Plan. If special circumstances require an extension of time for processing, a decision will be rendered as soon as possible, but not later than one hundred twenty (120) days after receipt of a request for the review. If the extension of time for review is required because of special circumstances, written notice of the extension shall be furnished to the claimant prior to the commencement of the extension. If the decision is not furnished within such time, the claim shall be deemed denied on review. The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner

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calculated to be understood by the claimant without legal counsel, as well as specific references to the pertinent Plan provisions on which the decision is based.
9.5
Benefit Payments from Trust . The Administrative Committee shall cause benefits to be paid from the Trust Fund pursuant to the provisions of the Plan.
9.6
Payment to Incompetents . Whenever, in the Administrative Committee’s opinion, a person entitled to receive benefits under the Plan is under legal disability or is incapacitated in any way so as to be unable to manage his financial affairs, the Administrative Committee may direct the payments becoming due to such person to be made to another for his benefit without responsibility of the Administrative Committee or the Trustee to see to the application of such payment. Payments made pursuant to such power shall be a complete discharge of any liability for making such payment under the provisions of the Plan.
9.7
Powers of Administrative Committee . The Administrative Committee shall have the full power and discretionary authority to administer the Plan in all of its details, subject to the requirements of ERISA. The Administrative Committee shall have the authority to construe the terms of the Plan, including the authority to remedy any omissions, ambiguities, or inconsistencies in the provisions of the Plan, and to resolve all questions arising under the Plan or in the administration of the Plan. Whenever, in the administration of the Plan, any discretionary action by the Administrative Committee is required, the Administrative Committee shall exercise its authority in a nondiscriminatory manner so that all persons similarly situated will receive substantially the same treatment. The Administrative Committee’s decision or actions shall be conclusive and binding upon all Participant’s and their beneficiaries, heirs, assigns, administrators, executors, and any other person claiming through them, in absence of clear and convincing evidence that the Administrative Committee acted arbitrarily and capriciously.
9.8
Special Powers . Without limiting the general discretionary authority of the Administrative Committee, the Administrative Committee’s powers include the power:
(a)
To construe and interpret the Plan, decide all questions of eligibility and determine the amount, manner, and time of payment of any benefit hereunder.

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(b)
To prescribed rules, procedures and forms to be followed regarding the administration of the Plan.
(c)
To receive, review and keep on file (as it deems convenient or proper) reports of the financial condition, and of the receipts and disbursements, of the Trust, and a copy of the Plan including any amendments thereto.
(d)
To comply with requirements of ERISA and all other government requirements.
(e)
To appoint and remove (1) a person or persons with responsibility for reporting and disclosure under the Code or any other applicable law; (2) attorneys and others to represent them before any court or governmental agency; (3) an investment manager or managers with exclusive authority and discretion to manage, acquire and dispose of part or all of the assets of the Plan; (4) an insurer or insurers; and (5) such other agents as may be required to assist in administering the Plan;
(f)
To authorize one of its member to execute written instruments setting forth the Plan or any amendments to the Plan duly adopted by the Board or the Committee in accordance with Section 12.1;
(g)
To establish a funding policy and method for the Plan, in each case consistent with the objectives of the Plan and consistent with ERISA, and to provide procedures for carrying them out;
(h)
To approve administrative expenses of the Plan and Trust to be paid from the Trust under Section 10.1;
(i)
To allocate responsibilities among themselves; and
(j)
To delegate its fiduciary responsibilities under the Plan, such delegation to be by written instrument in accordance with Section 405 of ERISA.
9.9
Use of Outside Specialists . The Administrative Committee shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports which shall be

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furnished by an Actuary, accountant, controller, counsel or other person who shall be employed or engaged for such purposes.
9.10
Power of Named Fiduciaries . The Named Fiduciaries shall have only those specific powers, duties, responsibilities and obligations as they are specifically given under the Plan. In general, the Employers shall have the sole responsibility for making contributions provided under Section 10.3. The Administrative Committee shall have the sole responsibility for the administration of the Plan in accordance with the procedures set forth in the Plan and shall have the power to amend the Plan (except as otherwise provided in Section 12.1). The Trustee shall have the responsibility for the administration of the Trust and the management of the Trust Assets held under the Trust as specifically provided for in the Trust. The Administrative Committee may appoint and remove Investment Managers as provided in the Trust Agreement. The Investment Manager(s) shall have the exclusive authority to manage (including the power to acquire and dispose of) all assets of the Trust placed under its management by the Administrative Committee in accordance with the terms of the agreement with the applicable Investment Manager. Each Named Fiduciary shall warrant that any directions given, information furnished, or action taken by it shall be in accordance with the provisions of the Plan or the Trust, as the case may be, authorizing or providing for such direction, information or action. Furthermore, each Named Fiduciary may rely upon such direction, information, or action of another Named Fiduciary as being proper under the Plan or the Trust, and is not required under the Plan or the Trust to inquire into the propriety of any such direction, information or action. It is intended under the Plan and the Trust that each Named Fiduciary shall be responsible for the proper exercise of its own powers, duties, responsibilities and obligations under the Plan and the Trust and shall not be responsible for any act or failure to act of the Company or another Named Fiduciary. No Named Fiduciary guarantees the Trust Assets in any manner against investment loss or depreciation in asset value.
9.11
Indemnification . To the extent that the Administrative Committee, or directors, officers and employees of the Company or of a participating Employer who serve on or on behalf

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of the Administrative Committee or otherwise as plan fiduciaries are not protected and held harmless by or through insurance, the Company indemnifies and saves harmless the Administrative Committee, and any director, officer or employee of the Company or of a participating Employer who serves on or on behalf of the Administrative Committee or otherwise as a plan fiduciary, from and against any and all loss resulting from liability to which the Administrative Committee, director, officer or employee, may be subjected by reason of any act or conduct (except willful misconduct or gross negligence) in connection with the Plan or Trust Fund or both, including reasonable attorneys’ fees and amounts paid in settlement of any claims approved by the Company.


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ARTICLE X
10.1
Trust . The Company (for itself and other Employers), shall enter into one or more agreements for the administration of the Trust Fund, in such form and containing such provisions as are appropriate. All assets of the Trust Fund shall be retained for the exclusive benefit of Participants, Joint Annuitants and Beneficiaries and shall be used to pay benefits to such persons or to pay administrative expenses of the Plan and Trust Fund (to the extent not paid by the Employer) and shall not revert to or inure to the benefit of the Employer, except to the extent provided in Sections 10.2 and 12.3.
10.2
Return of Contributions . Upon an Employer’s request, a contribution which was made by a mistake of fact, or conditioned upon the deductibility of the contribution under Section 404 of the Code, shall be returned to the Employer within one (1) year after the payment of the contributions or the disallowance of the deduction (to the extent disallowed), whichever is applicable. All contributions made to the Trust Fund shall be conditioned upon their deductibility under the Code.
10.3
Contributions . No contributions shall be required under the Plan from any Participant. The Employer(s) shall contribute over a period of time such amounts as may be determined by actuarial calculations to provide retirement income pursuant to the terms of the Plan. Such calculations shall be made by the Actuary appointed by the Administrative Committee.



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ARTICLE XI

RETIREE HEALTH PLAN ACCOUNT
11.1
Establishment of Retiree Health Plan .
(a)
There is created, established and maintained under the Plan a separate account known as the Retiree Health Plan Account. The Trustee and Administrative Committee agree to hold and administer the Retiree Health Plan Account, and to receive contributions hereto, for the purpose of providing for the payment of certain medical expenses pursuant to Section 401(h) of the Code, for Covered Retirees and their Covered Dependents (as such terms are defined below). The separate account shall be for recordkeeping purposes only. Funds contributed to the Retiree Health Plan Account may be invested without identification of which investments are allocable to the Retiree Health Plan Account.
(b)
(i)    No part of the income or corpus of the Retiree Health Plan Account shall be (either within the taxable year of contribution or thereafter) used for, or diverted to, any purpose (including the provision of any retirement benefits provided under the Plan) other than the provision of Medical Benefits, at any time prior to the satisfaction of all liabilities under the Plan with regard to the payment of Medical Benefits in accordance with this Section. Notwithstanding the above, the payment of any necessary or appropriate expenses attributable to the administration of the Retiree Health Plan Account may be made from the income or corpus of such account.
(ii)    Notwithstanding any other termination provisions herein, any amounts in the Retiree Health Plan Account which remain in such account following satisfaction of all liabilities for the payment of Medical Benefits arising under this Section shall be returned to the Employer.

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(c)
Notwithstanding the foregoing, no Medical Benefits shall be payable to any person, who is, or ever has been, a Key Employee as defined in Section 14, or his Covered Dependents.
11.2
Definitions . Whenever used in the Plan, the following terms shall have the meaning set forth below unless otherwise clearly required by the context:
(a)
“Covered Dependent” shall mean a Covered Retiree’s dependent who meets the conditions for coverage under the PerkinElmer, Inc. Retiree Health Plan. In no event will the term Covered Dependent include any person who is an eligible Covered Retiree himself or any person who is employed full-time with the Employer. If both parents of any Covered Dependent child are eligible Covered Retirees, the Covered Dependent child shall be considered as a Covered Dependent of only one of the Covered Retirees.
(b)
“Covered Retiree” shall mean a Retired Participant who has completed at least ten (10) Years of Service on his Normal or Early Retirement Date. In no event shall a Covered Retiree include a person not covered under the PerkinElmer, Inc. Retiree Health Plan, nor a person who is or ever was a Key Employee.
(c)
“Medical Benefits” shall mean, with respect to a Covered Retiree, a percentage of the Per Capita Retiree Health Cost, such percentage being equal to three thousand, four hundred dollars ($3,400) as indexed from time to time) divided by the Per Capita Retiree Health Cost, but in no event in excess of one hundred percent (100%) of such cost.
(d)
“Per Capita Retiree Health Cost” for any year shall mean the total annual Employer cost of claims under the PerkinElmer, Inc. Retiree Health Plan, divided by the number of retired employees covered under that plan at any time during that year.

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(e)
“PerkinElmer, Inc. Retiree Health Plan” shall mean the PerkinElmer, Inc. health plan, as it relates to retired persons, as it shall be amended from time to time, and the provisions of such Plan shall be incorporated by reference herein.
(f)
“Retired Participant” shall mean an individual who was an active Participant under the Plan until his Early, Normal or Postponed Retirement Date and who retires from Employment with the Employer and is thereupon immediately eligible to receive retirement benefits hereunder.
11.3
Election to Continue Coverage . If a Covered Dependent loses coverage as a result of the death or divorce of a Covered Retiree, such Covered Dependent shall have coverage continuation rights as shall be provided under the Retiree Health Plan, and the provisions of such continuation coverage shall be incorporated by reference with respect to benefits under the Retiree Health Plan Account created hereunder. Because such continuation coverage shall be provided under the Retiree Health Plan at the Covered Dependent’s expense, no further benefits will be paid from the Retiree Health Plan Account with respect to such Covered Dependents.
11.4
Funding Method and Policy . All contributions to fund benefits provided under this Section shall be made by the Employer, except those relating to Continuation Coverage. Subject to the restrictions of this Section, the Employer shall contribute to the Retiree Health Plan Account annually an amount which is reasonably estimated to cover the total cost of the benefits to be provided hereunder and which satisfies the general requirements applicable to deductions allowable under Section 404 of the Code (as set forth in Treasury Regulations 1.404(a)-3(f)). The total cost of providing Medical Benefits shall be determined in accordance with any generally accepted actuarial method which is reasonable in view of the provisions and coverage of the Plan, the funding medium, and other applicable considerations.
11.5
Subordination to Retirement Benefits . It is intended that the Medical Benefits provided under this Section be subordinate at all times to the retirement benefits provided under the Plan. Therefore, the aggregate of contributions (made after the effective date of this Section) to the Retiree Health Plan Account, shall at no time exceed twenty-five

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percent (25%) of the aggregate of contributions (made after such effective date) for all purposes of the Plan, other than contributions to fund past service credits. For this purpose, contributions to the Plan for benefits other than Medical Benefits shall not be deemed to be less than the cost of such benefits determined under the projected unit credit method (other than the cost of past service credits).
11.6
Benefits Provision . The benefits payable pursuant to this Section shall be limited to the payment of Medical Benefits for Covered Retirees and their Covered Dependents. The Medical Benefits provided under this Section and the Employer contributions to fund said Benefits shall not discriminate in favor of the highly compensated employees of the Employer within the meaning of Section 414(q) of the Code.
11.7
Coordination with Retiree Health Plan . Benefits under the Plan shall be provided by reimbursing annually the Employer or other paying agent under the PerkinElmer, Inc. Retiree Health Plan for the percentage of the Per Capita Retiree Health Cost, as defined under Section 11.2(d) for each Covered Retiree.
11.8
Reservation of the Right to Terminate Benefits . The Employer reserves the right to amend or terminate the Medical Benefits provided hereunder or the Retiree Health Plan at any time. In such event, assets in the Medical Benefit Account shall be used to provide the Medical Benefits provided hereunder, both to Covered Retirees and those Participants who at the date of termination subsequently become Covered Retirees, but only to the extent assets remain in such account. After the satisfaction of all such liabilities, any assets remaining shall revert to the Employer.
11.9
Disallowance of Deduction . All contributions made to the Retiree Health Plan Account shall be conditioned upon their deductibility under the Code. The disallowance of the deduction by the Internal Revenue Service shall be cause for reversion of the contribution to the Employer.



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ARTICLE XII
12.1
Right to Amend . The Company (for itself and other Employers), shall have the right at any time to amend the Plan by written instrument approved by the Administrative Committee, except that no such amendment shall have the effect of reducing any benefits accrued to a Participant, Joint Annuitant or Beneficiary prior thereto, or cause any part of the assets of the Trust Fund to be diverted to any purpose other than for the exclusive benefit of Participants, Joint Annuitants, or Beneficiaries; provided, however, that an amendment that is expected to have a significant cost impact (including, without limitation, an amendment to merge or terminate the Plan) as determined by the Committee whose determination will be final and binding, must be approved by the Board of the Company; and provided further that the Senior Vice President Human Resources may approve any amendment necessary to comply with the Code, ERISA or other applicable laws and regulations.
12.2
Right to Suspend . The Plan is adopted in the expectation that it will be continued indefinitely, but the continuance of the Plan and the payment of any contribution hereunder is not assumed as a contractual obligation. Each Employer reserves the right to discontinue its contributions under the Plan and any Employer may discontinue further contributions under the Plan without discontinuing the Plan with respect to any other Employer. The Company (for itself and the other Employers), as authorized by the Board, reserves the right to discontinue the Plan at any time. The suspension of contributions shall not itself constitute a discontinuance of the Plan as long as the minimum funding requirements of Section 412 of the Code are met.
12.3
Distribution of Funds upon Termination . The Plan may be terminated by the Board as to all or any particular group or groups of Participants and such other persons, if any, who have or may become entitled to benefits under the Plan on account of such Participant’s participation subject to the conditions that, at any time prior to the satisfaction of all liabilities with respect to Participants, Beneficiaries, Joint Annuitants and Eligible Spouses, no part of the funds of the Plan shall, by reason of such termination, be at any time used for or diverted to purposes other than for the exclusive benefit of such persons. Upon such termination of the Plan, or upon complete discontinuance of Company

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contributions, the funds of the Plan shall be allocated for the benefit of each Participant, Beneficiary, Joint Annuitant and Eligible Spouse in a manner approved by the Internal Revenue Service in accordance with the provisions of, and regulations issued pursuant to, Section 4044 of ERISA.
Upon termination or partial termination of the Plan, the right of each Participant to benefits accrued to the date of such termination or partial termination to the extent funded shall be nonforfeitable.
Upon termination of the Plan with respect to a group of Participants which constitutes a partial termination of the Plan, the proportionate interest of each Participant, Beneficiary, Joint Annuitant and Eligible Spouse affected by such partial termination shall be determined in a manner approved by the Internal Revenue Service in accordance with the provisions of, and regulations issued pursuant to, Section 4044 of ERISA.
The amount allocated for the benefit of each Participant, Beneficiary, Joint Annuitant or in accordance with the above shall be applied for the benefit of each Participant, Beneficiary, Joint Annuitant or Eligible Spouse either by a cash payment, or by insurance company contract or by the continuance of the fund and the payment of retirement incomes therefrom in such amounts as may be provided by the funds so allocated, all as the Administrative Committee shall determine. However, in the event that the assets available for allocation are less than the value of insured vested benefits, the Pension Benefit Guaranty Corporation may direct how the allocated amounts are to be applied.
In the event of any such termination, the Pension Benefit Guaranty Corporation (PBGC) will be notified in accordance with the notice requirements established by the PBGC.
If any of the funds of the Plan remain after the satisfaction of all liabilities of the Plan, the said remaining funds shall be paid by the Trustee to the Company.
12.4
Termination Events . The Plan will terminate with respect to any Employer upon the happening of any of the following events:

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(a)
Delivery to the Trustee of a notice of termination by the Employer specifying the date as of which the Plan shall terminate for such Employer.
(b)
Adjudication of an Employer as a bankrupt or a general assignment by the Employer to or for the benefit of creditors or a dissolution of any Employer.
12.5
Merger or Consolidation . In the event of any merger or consolidation of the Plan with (or transfer in whole or in part of the assets and liabilities of a trust not another Trust) any other plan of deferred compensation maintained or to be established for the benefit of all or some of the Participants of the Plan, the assets of a trust applicable to such Participants shall be transferred to another trust fund only if:
(a)
Each Participant would (if either the Plan or the other plan then terminated) receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before this merger, consolidation or transfer (if the Plan then terminated);
(b)
Such other plan and trust are qualified under Sections 401(a) and 501(a) of the Code.



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ARTICLE XIII
MISCELLANEOUS
13.1
Plan Voluntary . The adoption and maintenance of the Plan shall not be deemed to be a contract between the Employer and any Employee. Nothing herein contained shall be deemed to give to any Employee the right to be retained in the employ of an Employer or to interfere with the right of the Employer to discharge any Employee at any time, nor shall it be deemed to give the Employer the right to require any Employee to remain in its employ, nor shall it interfere with the Employee’s right to terminate his Employment at any time.
13.2
Benefits Payable from Trust . All benefits payable under the Plan shall be paid or provided for solely from the Trust Fund and Employers assume no liability or responsibility therefor.
13.3
Non-alienation of Benefits . Except in the case of a Qualified Domestic Relations Order, the interest hereunder of any Participant, Joint Annuitant, or Beneficiary shall not be alienable by the Participant, Joint Annuitant, or Beneficiary either by assignment or by any other method and shall not be subject to be taken by his creditors by any process whatever. The Administrative Committee shall establish a written procedure to determine the qualified status of domestic relations orders and to administer distributions under such qualified orders.
The Plan may offset against the benefit of any Participant, any amount that the Participant is ordered or required to pay under a judgment, order, decree or settlement agreement described in ERISA Section 206(d)(4) and Section 401(a)(13)(C) of the Code.
13.4
Rights of Participants . All rights of every Participant under the Plan with relation to the Trust Fund or which may arise against or affect the Trustee shall be enforced exclusively by the Administrative Committee, which is hereby given the express power and authority to enforce all such rights as the representatives of every Participant under the Plan, and in any action or proceeding with relation to the Trust Fund or brought by or against the

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Trustee, the Administrative Committee shall be deemed to represent every Participant.
13.5
Enforcement. The Plan and any subsequent amendments thereto, shall be construed and enforced under the Code, ERISA, and the laws of the Commonwealth of Massachusetts.
13.6
Payment of Plan Expenses . Investment brokerage fees, transfer taxes, cost of necessary actuarial studies, and similar cost arising as a direct result of the making of investments, actuarial studies, sales of assets or realization of investment yield shall be paid from the Trust Fund.
13.7
Restriction on Benefits . In the event of Plan termination, the benefit of any highly compensated active or form Employee is limited to a benefit that is nondiscriminatory under Section 401(a)(4) of the Code.
Benefits distributed to any of the 25 most highly compensated active and highly compensated former Employees with the greatest Compensation in the current or any prior year are restricted such that the annual payments are no greater than an amount equal to the payment that would be made on behalf of the Employee under a straight life annuity that is the Actuarial Equivalent of the sum of the Employee’s Accrued Benefit, the Employee’s other benefits under the Plan (other than a Social Security supplement, within the meaning of Section 1.411(a)-7(c)(4)(ii) of the Treasury Regulations, and the amount the employee is entitled to receive under a Social Security supplement.
The preceding paragraph shall not apply if: (1) after payment of the benefit to an Employee described in the preceding paragraph, the value of Plan assets equals or exceeds one hundred percent (100%) of the value of current liabilities, as defined in Section 412(l)(7) of the Code, (2) the value of the benefits for an Employee described above is less than one percent (1%) of the value of current liabilities before distribution, or (3) the value of the benefits payable under the Plan to an Employee described above does not exceed $5,000.
For purposes of this Section 13.7, benefit includes loans in excess of the amount set forth in Section 72(p)(2)(A) of the Code, any periodic income, any withdrawal values payable

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to a living employee, and any death benefits not provided for by insurance on the Employee’s life.
13.8
Illegal Provisions . If any provisions of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of the Plan, but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provisions had never been inserted herein.
13.9
Forfeitures. Forfeitures arising from termination of Employment, death, or for any other reason must not be applied to increase the benefits any Employee would otherwise receive under the Plan at any time prior to the termination of the Plan or the complete discontinuance of Employer’s contribution thereunder; the amount forfeited must be used as soon as possible to reduce the Employer’s contributions.
13.10
Lump Sum Payments . Notwithstanding any provision in the Plan to the contrary, including the requirement to obtain spousal consent to a distribution, if the Actuarial Equivalent present value of the benefit from the Trust Fund payable to any person shall not exceed $1,000 and the benefit has not yet commenced, a lump sum payment of such Actuarial Equivalent present value shall automatically be made to the appropriate recipient as soon as practicable following the date the Actuarial Equivalent present value was determined in lieu of all other benefits under the Plan. Such determination shall be made on or after the date the Participant terminates Employment or dies, as applicable. Such determination shall also be made as of the first day of each Plan Year (provided no benefit has yet commenced) based on the Actuarial Equivalent assumptions then in effect.
If the Actuarial Equivalent present value of the benefit from the Trust Fund payable to a Participant is $0, the Participant shall be deemed to have received a distribution of his vested Accrued Benefit. If a Participant who is deemed to have received a distribution in accordance with this Section 13.10 resumes Employment with the Employer before incurring five (5) consecutive One year Breaks in Service, the participant will be deemed to have made repayment in accordance with Section 13.11 of the amount of the deemed distribution upon his resumption of Employment.

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13.11
Repayment of Lump Sums . In the event that an individual’s Accrued Benefit has been distributed in the form of a lump sum in accordance with Section 13.10, and that individual later returns to Employment with an Employer, the following rules shall apply in determining the individual’s Years of Service under Articles V and VII of the Plan:
(a)
If the individual returns to Employment and repays within five (5) years of the date of reemployment the amount he received from the Trust plus interest compounded annually at the Actuarial Equivalent interest rate in effect on the January 1st of the Year of reemployment, his prior Years of Service will be reinstated under both Articles V and VII of the Plan.
(b)
If the individual returns to Employment and does not repay the amount received from the Trust, his prior Years of Service will be reinstated under Article V of the Plan.
13.12
Headings . The headings of articles and sections hereof are included solely for convenience and for reference, and if there be any conflict between such headings and the text of the Plan, the text shall control.
13.13
Action by Employer . Any action by the Employer under the Plan may be by resolution of its Board, or by an person or persons duly authorized by resolution of said Board to take such action.
13.14
Gender and Number . The masculine gender words include both sexes, the single includes the plural, and the plural includes the single, unless the context clearly otherwise requires.
13.15
Qualified Military Service . Notwithstanding any provisions of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code. In addition, in accordance with Section 401(a)(37) of the Code, the survivors of a Participant who dies while performing qualified military service shall be entitled to additional benefits (other than benefit accruals relating to the period of qualified military service) that would be provided under the Plan if the Participant had resumed employment and then terminated employment on

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account of death. Thus, to the extend required by Section 401(a)(37) and Section 414(u)(8)(B), such a Participant shall be credited with vesting service for the period of the Participant’s qualified military service.
ARTICLE XIV

TOP-HEAVY PLAN RESTRICTIONS
The following restrictions shall apply if the Plan becomes a Top-Heavy Plan.
14.1
Definitions. For purposes of this Article XIV, the following definitions shall apply:
(a)
Key Employee – means any Employee or former Employee (including any deceased Employee) who at any time during the Plan Year that includes the Determination Date was an officer of the Employer having annual compensation greater than $130,000 (as adjusted under Section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002 ($165,000 for 2012), a 5 percent (5%) owner of the Employer, or a 1-percent (1%) owner of the Employer having annual compensation of more than $150,000. For this purpose, annual compensation means compensation within the meaning of Section 415(c)(3) of the Code. The determination of who is a Key Employee will be made in accordance with Section 416(i)(1) of the Code and applicable regulations and other guidance of general applicability issued thereunder.
(b)
Non-Key Employee – any Employee who is not a Key Employee.
(c)
Determination Date – the last day of the preceding Plan Year, or of the current Plan Year, if the Plan was not in existence during the preceding year.
(d)
Valuation Date – the annual date on which the Plan’s assets and liabilities are valued. This is the same valuation date used for computing Plan costs for minimum funding.
(e)
Annual Compensation – an Employee’s Compensation (as defined in Section 6.2(b)) received from the Employer during the Plan Year.

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14.2
Top-Heavy Plan . The Plan is a Top-Heavy Plan with respect to any Plan Year if, as of the most recent Valuation Date occurring within a twelve (12) month period ending on the Determination Date applicable to such Plan Year, the total value of Accrued Benefits of Key Employees exceeds sixty percent (60%) of the Total Value of Accrued Benefits for all Participants.
The present value of Accrued Benefits and the amounts of account balances of a Participant as of the Determination Date shall be increased by the distributions made with respect to the Participant under the Plan and any plan aggregated with the Plan under Section 416(g)(2) of the Code during the one (1) year period ending on the Determination Date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Section 416(g)(2)(A)(i) of the Code. In the case of a distribution made for a reason other than severance from employment, death, or disability, this provision shall be applied by substituting “five (5) year period” for “one (1) year period.”
If any Employee has not performed services for the Employer at any time during the one (1) year period ending on the Determination Date, his Accrued Benefit shall be disregarded for purposes of determining whether the Plan is Top-Heavy as set forth in Section 416(g)(4)(E) of the Code.
A Key Employee in a prior Plan Year who is not a Key Employee with respect to a current Plan Year shall be excluded entirely in computing the percentage in the first paragraph above.
14.3
Restrictions . The following restrictions shall apply if the Plan becomes a Top-Heavy Plan.
(a)
Vesting. A Participant of a Top-Heavy Plan shall have a nonforfeitable interest in his Accrued Benefit derived from Employer contributions as provided under the following schedule:

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YEARS OF SERVICE
VESTED PERCENTAGE OF ACCRUED BENEFIT

Less than 2
0%
2
20%
3
40%
4
60%
5 or more
100%

Accrued Benefit, for purposes of this subsection (a), shall include that portion of Accrued Benefits which the Participant earned during all prior Plan Years, whether or not the Plan was a Top-Heavy Plan during such prior Plan Years.
If the Plan ceases to be Top-Heavy, the vesting schedule shall revert to the schedule set forth in Section 4.5. However, any portion of a Participant’s Accrued Benefit that was vested before the Plan ceased to be Top-Heavy shall remain non-forfeitable, and any Employee who has three or more Years of Service for Vesting may elect to have the Top-Heavy vesting schedule apply to his benefits.
(b)
Minimum Benefits. During any Plan Year in which the Plan is a Top-Heavy Plan, the Accrued Benefit, derived from Employer’s contributions and expressed as a life annuity commencing at Normal Retirement Date, of a Non-Key Employee, shall be the greater of the benefit accrued for that year under Section 2.2 of the Plan or (1) times (2) where:
(i)
is the Employee’s Average Compensation; and
(ii)
is two percent (2%) per Year of Service, not to exceed twenty percent (20%).
Each Non-Key Employee who is a Participant and has completed at least 1,000 Hours of Service during an accrual computation period must accrue a minimum benefit in accordance with the provisions of this Section 4.3(b) regardless of

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whether such Non-Key Employee’s level of Compensation and regardless of whether such Non-Key Employee is employed on a specified date.
Any accrual of Company-derived benefits, whether or not attributable to years of which the Plan is Top-Heavy, may be used to satisfy such minimum benefits.
For purposes of this subsection (b), the following definitions are applicable:
(i)
Years of Service shall be the Participant’s Years of Service except any service with the Employer shall be disregarded to the extent that such service occurs during a Plan Year when the Plan benefits (within the meaning of Section 410(b) of the Code) no Key Employee or former Key Employee any year which includes the last day of a Plan Year which the Plan was not a Top-Heavy Plan.
(ii)
Average Compensation shall be the Participant’s average Compensation from the Employer during that period of five (5) consecutive years (or actual years, if less than five) which produce the highest average.
14.4
Plan Aggregations . For purposes of determining top-heaviness, the aggregation group shall include:
(a)
each plan of the Employer in which a Key Employee is a participant; and
(b)
each other plan of the Employer that allows a covering a Key Employee to meet qualification requirements under the coverage and anti-discrimination rules of Sections 401(a)(4) and 410 of the Code; and
(c)
each terminated plan described in subsection (a) or (b) above maintained by the Employer during the Plan Year containing the Determination Date or any of the four preceding Plan Years (regardless of whether the plan has terminated); and
(d)
at the option of the Employer, any other plan maintained by the Employer as long as the expanded aggregation group including such plan or plans continues to

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satisfy coverage and anti-discrimination rules of Sections 401(a)(4) and 410 of the Code.
The Plan shall be a Top-Heavy Plan only if the sum of (a) the percent value of Accrued Benefits for Key Employees, as determined under the provisions of this Article applicable to defined benefit plans, under all such plans included within the aggregation group, and (b) the aggregate of the account balances of Key Employees, as determined under the provisions of this article applicable to defined contribution plans, exceeds sixty percent (60%) of a similar sum determined for all participants in such plans.
If the Plan becomes a Top-Heavy Plan, for Participants who are covered by both the Plan and a defined contribution plan of the Employer, the minimum benefit required shall be provided under the Plan. The Plan Administrator shall act pursuant to Treasury Regulations in carrying out these options.
Solely for the purpose of determining if the Plan, or any other Plan included in a required aggregation group of which the Plan is a part, is Top-Heavy (within the meaning of Section 416(g) of the Code) the Accrued Benefit each Non-Key Employee shall be determined under (1) the method, if any, that uniformly applies for accrual purposes under all plans maintained by the Employer and all entities related to the Employer under Section 414 of the Code or (b) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional accrual rate of Section 411(b)(1)(C) of the Code.

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The minimum benefit requirements of Section 416(c)(1) of the Code and the Plan shall be met as to non-Key Employees who participate in the Plan and in the PerkinElmer, Inc. Savings Plan providing the minimum benefit to such Non-Key Employees under the Plan.
IN WITNESS WHEREOF, and as evidence of the adoption of the Plan, the undersigned officer duly authorized has appended his signature this 20 th day of December 2012.
PerkinElmer, Inc.
By: /s/ John R. Letcher
John R. Letcher
Its Senior Vice President
Human Resources



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APPENDICES




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APPENDIX A
PARTICIPATION OF EG&G ASTROPHYSICS RESEARCH CORPORATION
Effective as of December 1, 1989 and except as otherwise specifically provided below, EG&G Astrophysics Research Corporation (now known as PerkinElmer, Inc. Detection Systems) adopts the Plan as amended on January 1, 1985, and including all subsequent amendments thereto, in substitution for and in continuation of the Astrophysics Research Corporation Defined Pension Plan (the “Astrophysics Plan”). The Plan shall be and become the Astrophysics Plan in all respects, except for Section 4.2 and 8.2, as to which Sections the following provisions shall be the respective provisions of the Plan as it applies to Astrophysics Participants:
Article .    Section 4.2 as amended on January 1, 1989, reads as follows:
“4.2
“Normal Retirement Income.” A Participant retiring on his Normal Retirement Date shall be entitled to receive a monthly income for life, payable from his Normal Retirement Date, which shall be equal to one-twelfth (1/12) of the sum of (a) and (b) and (c) below:
(a)
the sum of (i) and (ii) below:
(i)
For a Participant who was a Participant in the Astrophysics Plan on November 30, 1989, the annual accrued benefit under the Astrophysics Plan as of November 30, 1989, as set forth on the attached schedule.
(ii)
For each Year of Credited Service (with appropriate adjustment for completed months) after November 30, 1989, eighty-five one hundredths percent (.85%) of his Average Earnings, plus
For each Year of Credited Service not in excess of thirty-five (35) (with appropriate adjustment for completed months) after November 30, 1989, seventy-five one hundredths percent (.75%) of that part, if any, of his Average Earnings in excess of the Social Security Tax Base.
OR

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(b)
For every Participant, for each Year of Service (with appropriate adjustment for completed months) before or after December 1, 1989, eighty-five one hundredths percent (.85%) of his Average Earnings, plus
For each Year of Service not in excess of thirty-five (35) (with appropriate adjustment for completed months) before or after December 1, 1989, seventy-five one hundredths percent (.75%) of that part, if any, of his Average Earnings in excess of the Social Security Tax Base.
(c)
For an Employee who was a Participant as of December 31, 1988, the monthly retirement income accrued as of December 31, 1988, as determined under the provisions of Appendix I of the Plan in effect on that date.”

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SCHEDULE OF ACCRUED BENEFITS
FROM THE ASTROPHYSICS PLAN
AS OF NOVEMBER 30, 1989
EMPLOYEE
BENEFIT
PERCENT
VESTED
ANNUAL
BENEFIT
MONTHLY
 
 
 
 
 
 
 
 
 
 
 
 



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APPENDIX B
DEFINITION OF CREDITED SERVICE FOR SECTION 4.2(b)(iii)

Social Security Number
Name
Service Credit

 
 
 
 
 
 
 
 
 



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APPENDIX C
EG&G MOUND APPLIED TECHNOLOGIES, INC.
Effective September 30, 1997, the contract between EG&G Mound Applied Technologies, Inc. and the Department of Energy expired. The purpose of this Appendix C is to describe the benefits with respect to certain participants under the EG&G Mound Applied Technologies, Inc. Salaried Employees’ Pension Plan (the “Mound Plans”) who transferred to the Company prior to September 30, 1997 (“Transferred Participants”).
1.      The Accrued Benefits under the Mound Plans (and the corresponding assets and liabilities) of the Transferred Participants listed below will be transferred to the Plan as soon as practicable after September 30, 1997. The Accrued Benefits so transferred, and the applicable rights and features related to such Accrued Benefits, shall be determined in accordance with the Mound Plans as in effect on September 30, 1997.
2.      Years of Vested Service counted under the Mound Plans shall be counted as Years of Service under the Plan with respect to Transferred Participants.
3.      Years of Credited Service under the Mound Plans shall be counted as Credited Service under the Plan with respect to Transferred Participants.
4.      Section 4.2 is amended by adding the following paragraph to the end thereof:
“Transferred Participants from Mound Plans
The normal retirement income determined above for a Transferred Participant from the Mound Plans shall be offset by his monthly Accrued Benefit under the Mound Plans determined as of September 30, 1997 and shall be increased by the “Extra Benefit” specified for said transferred Participants in Section 5 in Appendix C. The Transferred Participants described in this Appendix C.
5.    Section 4.3 is amended by adding the following paragraph to the end thereof:

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“Transferred Participants from Mound Plans
The retirement income determined above for a Transferred Participant from the Mound Plans shall be offset by his monthly Accrued Benefit under the Mound Plans determined as of September 30, 1997, reduced for commencement prior to his Normal Retirement Date in accordance with the provisions of the Mound Plans as in effect on September 30, 1997.”
Article .    The Transferred Participants described in this Appendix C are listed below:

SSN
NAME
9/30/97
ACCRUED
BENEFIT
9/30/97
PRESENT
VALUE
EXTRA
BENEFIT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



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APPENDIX D
CREDITED SERVICE DETERMINATIONS

LOCATION
NAME
LOCATION
NUMBER
EARLIEST DATE
CREDITED SERVICE
BEGINS
Wright Components
025
01/01/1988
Opto Electronics Components - St. Louis
030
01/01/1977
Opto Electronics Components – St. Louis (Union)
030U
01/01/1978
Pressure Science
075
10/01/1986
Reticon
080
06/01/1988
Power Systems
093
04/01/1984
Life Sciences – Wallac (Gaithersburg)
154
06/14/1993
Life Sciences – Wallac (Akron)
179
03/01/1998
Belfab
181
04/01/1998
Belfab (Union)
182
04/01/1998
Analytical Instruments
193
05/29/1999

In accordance with Section 5.2(e), Participants employed at the listed locations shall receive credit for vesting purposes for employment at the respective location from initial date of hire at the location.



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APPENDIX E
AMETEK, INC.
A Participant who was an ‘Affected Employee’ within the meaning of Section 10.2 of the Employer’s December 6, 2001 Master Purchase Agreement (the “Agreement”) with AMETEK, INC. shall have the following rules apply in determining his Accrued Benefit. An Affected Employee other than a Foreign Affiliate Employee within the meaning of Section 10.2 of the Agreement shall be treated as having received Earnings from the Employer equal to the amount of Earnings credited under the Plan as of the closing date of the Agreement increased by 3.5% for each calendar year after December 28, 2001 during which the Affected Employee remains employed by AMETEK, INC.
The provisions of this Appendix E shall cease to apply after March 15, 2003. For the period commencing on January 1, 2003 and ending on March 15, 2003 an Affected Employee who remains employed by Ametek, Inc. on March 15, 2003 shall receive credit for one quarter of Earnings, as previously adjusted pursuant to this Appendix E through December 31, 2002, increased by .875% (.25 x 3.5%), with no additional Earnings credited under the Plan for periods after March 15, 2003.



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APPENDIX F
SEMICONDUCTOR PARTICIPANTS
Notwithstanding anything in the Plan to the contrary, a Participant employed in the Semiconductor division who remained employed by the Company through February 28, 2006 shall have their Credited Service determined as if they remained employed by the Company through December 31, 2006.



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APPENDIX G
PROVISIONS APPLICABLE TO MISSOURI METALS EMPLOYEES
Notwithstanding any other provisions of the Plan, the following provisions shall apply in determining the amount of benefit for a Missouri Metals Employee:
ARTICLE ONE
DEFINITIONS
1.01     “ Accrued Benefit ” shall mean the benefit calculated under section 5.01 of this Appendix G using Credited Service under section 3.02 of this Appendix G as of the date of calculation.
1.02     “ Actuarial Equivalent ” shall mean a benefit of equivalent value to the benefit which would otherwise have been provided, determined on the basis of the 1971 Group Annuity Mortality Table with no loading, and projected by Scale E, with a one-year age setback for the Missouri Metals Participant and a five-year age setback for any Beneficiary and on the basis of an interest rate of seven percent (7%). In the case of a lump sum form of payment with an annuity starting date before October 1, 2000, the interest rate used shall be the rate used by the Pension Benefit Guaranty Corporation for purposes of determining the present value of a benefit on Plan termination and which is in effect on the first day of the Plan Year. In the case of a lump sum form of payment with an annuity starting date on or after October 1, 2000, Actuarial Equivalent shall, instead, be based on the Applicable Mortality Table and the Applicable Interest Rate.
For purposes of this section 1.02 of this Appendix G, the following definitions shall apply:
(a)     Applicable Mortality Table means the mortality table based on the prevailing commissioners’ standard table (described in Section 807(d)(5) of the Code) that is prescribed by the Commissioner of the Internal Revenue Service in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin.
(b)     Applicable Interest Rate means the annual interest rate on 30-year Treasury securities as specified by the Commissioner of the Internal Revenue Service for the Lookback Month, as published in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin.
(c)     Lookback Month means the second full calendar month preceding the first day of the Stability Period.
(d) Stability Period means the Plan Year that contains the annuity starting date.
1.03     “ Actuary ” shall mean the actuarial firm or individual selected by the Administrative Committee from time to time, which firm or individual meets all applicable government requirements for enrollment then in effect.

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1.04 “ Affiliated Entity ” shall mean
(a) any corporation which is a member of a controlled group of corporations (as defined in Section 414(b) of the Code) which includes the Employer;
(b)     any trade or business (whether or not incorporated) which is under common control (as defined in Section 414(c) of the Code) with the Employer;
(c)     any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Section 414(m) of the Code) which includes the Employer; and
(d)     any other entity required to be aggregated with the Employer pursuant to regulations under Section 414(o) of the Code.
(e)     “50% Affiliated Entity” shall mean an Affiliated Entity but with “more than fifty percent (50%)” substituted for the “at least eighty percent (80%)” test in Section 1563(a) of the Code.
1.05     “ Break in Service ” shall mean, with respect to any calendar year, a separation from employment as described in section 3.05 of this Appendix G.
1.06     “ Missouri Metals Employee ” shall mean an hourly-rated employee of the Company who is (a) included in the basic collective bargaining agreement between the Company and District No. 9 of the International Association of Machinists and Aerospace Workers, as amended from time to time and (b) not covered by another defined benefit pension plan to which the Company makes contributions.
1.07     “ Missouri Metals Participant ” shall mean a Missouri Metals Employee who has a present or future right to receive benefits under this Appendix G of the Plan.
1.08     “ Qualified Reemployment ” shall mean the reemployment of a Missouri Metals Participant by the Company, the Employer or an Affiliated Entity or the continued employment of a Missouri Metals Participant after his Normal Retirement Date in such a capacity that the Missouri Metals Participant receives or is entitled to receive compensation for at least 40 Hours of Service (not including Hours of Service under Section 2.26(b) during a calendar month.
1.09     “ Total Disability ” shall mean a Missouri Metals Participant’s inability, due to accident, injury, or disease, to engage in any work for remuneration or profit for the balance of his life. Disability resulting from the following causes shall not constitute Total Disability under the Plan:
(a)     service in the Armed Forces or Merchant Marine of the United States or any other country;
(b) warfare or acts of a public enemy;
(c) willful participation in any criminal act;

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(d) intentionally self-inflicted or self-incurred injury; or
(e) use of drugs or narcotics contrary to law.
1.10     “ Years of Credited Service ” shall mean the number of full and partial calendar years counted with respect to determining a Missouri Metals Employee’s Accrued Benefit under the Plan, as determined under Article Three.
1.11     “ Years of Service ” shall mean the number of calendar years counted with respect to determining a Missouri Metals Employee’s eligibility for benefits and vested status under the Plan, as determined under Article Three.
ARTICLE TWO
ELIGIBILITY TO PARTICIPATE
2.01      Eligibility to Participate . Each Missouri Metals Employee who was a Missouri Metals Participant as of September 30, 2001 shall continue to participate in the Plan for as long as he remains a Missouri Metals Employee or is entitled to a benefit under the Plan.
2.02      Plan Closed . No Missouri Metals Employee shall first become a Missouri Metals Participant after December 31, 2000.
ARTICLE THREE
SERVICE AND CREDITED SERVICE
3.01      Service for Eligibility for Benefits and Vesting . A Missouri Metals Employee shall accrue a Year of Service for each calendar year during which he is credited with 1,000 Hours of Service.
3.02      Credited Service for Benefit Accrual . Except as provided in section 3.03 of this Appendix G, a Missouri Metals Participant shall accrue a Year of Credited Service for each calendar year in which he completes at least the number of his regularly scheduled, annual Hours of Service. A Missouri Metals Participant’s number of regularly scheduled, annual Hours of Service shall be determined by the Administrative Committee, which shall apply uniform and nondiscriminatory standards developed on the basis of objective criteria including, but not limited to, job classification. In no event, however, shall a Missouri Metals Participant’s number of regularly scheduled, annual Hours of Services be deemed to exceed 2,080 for purposes of the Plan. For purposes of this section and section 3.03 of this Appendix G, a Missouri Metals Participant shall accrue a Year of Credited Service only in an eligible classification with the Company or a predecessor company to the earliest of (a) transfer to an ineligible classification with the Company or the Employer, (b) transfer to an Affiliated Entity, or (c) termination of employment with the Company or the Employer for any other reason, including early retirement, Total Disability (except as described in section 3.04(b) of this Appendix G), or death.
3.03      Partial Years of Credited Service . Subject to the limitations in section 3.02 of this Appendix G, a Missouri Metals Participant shall accrue a partial Year of Credited Service for any

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calendar year in which he is credited with fewer than the number of his regularly scheduled, annual Hours of Service. Such fractional credit shall be in the greater of (a) or (b) below:
(a)     one-twelfth (1/12) of a Year of Credited Service for each 83 Hours of Service credited during a calendar year; provided, however, that in no event shall Credited Service under this subsection exceed the actual number of months elapsed, rounded to the next higher month, or
(b)     that portion of a Year of Credited Service determined by a fraction, the numerator of which is the number of Hours of Service with which the Missouri Metals Participant is credited in the calendar year and the denominator of which is the number of his regularly scheduled, annual Hours of Service. The fraction described in this subsection shall not exceed one (1).
3.04 Special Rules .
(a)     For purposes of section 3.01 and section 3.02 of this Appendix G, service with a predecessor company shall be credited only upon the approval of the Board of Directors.
(b)     For purposes of section 3.02 of this Appendix G, a Missouri Metals Employee shall receive credit for service during the twenty-six (26) week waiting period in which no disability retirement benefits are paid, if he thereafter is determined to suffer a Total Disability.
(c)     For purposes of section 3.02 and section 3.03 of this Appendix G, a Missouri Metals Employee shall not receive credit for service before November 1, 1980.
3.05 Breaks in Service .
(a)     Any calendar year in which a Missouri Metals Employee is credited with not more than 500 Hours of Service shall constitute a one (1) year Break in Service; provided, however, that if a Missouri Metals Employee is absent for the following reasons, he shall be credited with an Hour of Service, for purposes of this section only, for each Hour of Service he would have received if he had continued in the active employ of the Company during the following periods of absence:
(1) layoff, for a period not in excess of one (1) year;
(2)     leave of absence with the approval of the Administrative Committee for a period not in excess of one (1) year, unless extended by the Administrative Committee;
(3)     disability leave with the approval of the Administrative Committee for a period not in excess of one (1) year;
(4)     military service such that his right to reemployment is protected by law;
(5) jury duty.

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(b)     Service credited under this section shall not be credited for any other purpose under the Plan unless such service is comprised of Hours of Service.
(c)     If a Missouri Metals Employee is absent from work by reason of pregnancy, childbirth or adoption, or for purposes of the care of such Missouri Metals Employee’s child immediately after birth or adoption, such Missouri Metals Employee shall be credited solely for purposes of this section with sufficient Hours of Service to avoid a Break in Service in the calendar year in which the absence commences or, if the Missouri Metals Employee already has been credited with more than 500 Hours of Service in such calendar year, the immediately following calendar year. Hours of Service during such absence shall be credited in an amount equal to the Hours of Service with which the Missouri Metals Employee would have been credited but for such absence or, if such hours cannot be determined, at the rate of eight (8) hours per normal workday.
3.06 Restoration of Service .
(a)     A Missouri Metals Participant who has a vested right to a benefit under section 6.01 of this Appendix G and who incurs a Break in Service shall have his pre-break and post-break service with the Company, the Employer and each Affiliated Entity aggregated for purposes of sections 3.01 and 3.02 of this Appendix G on his reemployment by the Company, Employer or an Affiliated Entity.
(b)     A Missouri Metals Participant who does not have a vested right to a benefit under section 6.01 of this Appendix G and who incurs a Break in Service shall have his pre-break and post-break service with the Company, Employer and each Affiliated Entity aggregated for purposes of sections 3.01 and 3.02 of this Appendix G if he is reemployed at a time when the number of his consecutive Breaks in Service is less than the greater of (1) the number of Years of Service he had accrued before his Break in Service, or (2) five. If the number of his consecutive Breaks in Service is equal to or greater than the number of his Years of Service before the break or five, if greater, he shall receive no credit for his pre-break service for purposes of section 3.01 and 3.02 of this Appendix G.
3.07      Uniformity . The provisions of this Article Three shall be applied according to non-discriminatory rules of general application.
ARTICLE FOUR
ELIGIBILITY FOR BENEFITS
4.01      Normal Retirement . A Missouri Metals Participant shall attain Normal Retirement Age on the date he attains age 65. A Missouri Metals Participant shall be eligible for normal retirement benefits as of the first day of the calendar month coincident with or next following the month in which he attains Normal Retirement Age. This date shall be his Normal Retirement Date.
4.02     Late Retirement . If a Missouri Metals Participant continues his employment with the Company, the Employer or an Affiliated Entity beyond his Normal Retirement Date, he shall

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be eligible for late retirement benefits on the first day of the calendar month coincident with or next following the date on which he terminates employment with the Company, the Employer and each Affiliated Entity. This date shall be his Late Retirement Date.
4.03     Early Retirement . A Missouri Metals Participant shall be eligible for early retirement benefits as of the first day of the calendar month coincident with or next following the month in which he attains age 55, accrues 15 Years of Service, and terminates employment with the Company, the Employer and each Affiliated Entity. This date shall be his Early Retirement Date.
4.04 Disability Retirement .
(a)     A Missouri Metals Participant shall be eligible for the disability retirement benefits described in section 5.04 of this Appendix G if, after he has accrued 15 or more Years of Service, he suffers a Total Disability which continues for at least twenty-six (26) weeks and causes him to terminate his employment with the Company, the Employer and each Affiliated Entity. The first day of the month coincident with or next following the expiration of the twenty-six (26) week period of Total Disability or the Administrative Committee’s receipt of medical certification of Total Disability, if later, shall be the Missouri Metals Participant’s Disability Retirement Date.
(b) Total Disability shall be established on the basis of an independent medical examination to the satisfaction of the Administrative Committee, using nondiscriminatory standards uniformly applied. The Administrative Committee may direct that any former Missouri Metals Employee receiving Total Disability benefits shall be reexamined without expense to him from time to time, but not more than once in any calendar year, to determine if Total Disability continues to exist. Benefits hereunder shall terminate at any time that the former Missouri Metals Employee ceases to be disabled under this section. Failure to submit to such reexamination shall be cause for termination of Total Disability benefits hereunder.
4.05     Furnishing Data. Each Employee shall furnish such data as the Administrative Committee may consider necessary for the determination of the Employee’s rights and benefits under the Plan and shall otherwise cooperate fully with the Administrative Committee in the administration of the Plan.
ARTICLE FIVE
CALCULATION OF BENEFITS
5.01     Normal Retirement. The monthly retirement benefit payable to a Missouri Metals Participant as a life annuity commencing on his Normal Retirement Date shall equal the product of his Years of Credited Service under sections 3.02 and 3.03 of this Appendix G multiplied by the appropriate unit benefit determined for his date of retirement or termination:
(a)     $12.00 for retirements or terminations occurring on or after October 15, 1988 but before October 14, 1991;

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(b) $13.00 for retirements or terminations occurring on or after October 14, 1991 but before October 14, 1992;
(c)     $14.00 for retirements or terminations occurring on or after October 14, 1992 but before October 14, 1993;
(d)     $15.00 for retirements or terminations occurring on or after October 14, 1993 but before October 14, 1994; and
(e)     $16.00 for retirements or terminations occurring on or after October 14, 1994.
The annual retirement benefit of a Missouri Metals Participant shall equal the monthly retirement benefit as determined above multiplied by twelve (12).
A Missouri Metals Participant’s retirement benefit determined in accordance with this section 4.01 of this Appendix G is expressed as a life annuity commencing at his Normal Retirement Date. Retirement benefits payable under any other form of payment shall be the Actuarial Equivalent of the life annuity.
5.02     Late Retirement. A Missouri Metals Participant who is eligible for benefits under section 4.02 of this Appendix G shall receive a monthly pension, calculated as under section 5.01 of this Appendix G but payable as of his Late Retirement Date.
5.03     Early Retirement. A Missouri Metals Participant who is eligible for benefits under section 4.03 of this Appendix G shall receive either:
(a)     a reduced monthly pension, calculated as under section 5.01 of this Appendix G, based on his Years of Credited Service and reduced by 1/180th for each of the first sixty (60) full calendar months and by 1/360th for each of the next sixty (60) full calendar months by which the commencement of his benefit precedes his Normal Retirement Date; or
(b)     a deferred, unreduced monthly pension, calculated as under section 5.01 of this Appendix G, based on his Years of Credited Service, with payment commencing on his Normal Retirement Date.
5.04 Disability Retirement.
(a)     A Missouri Metals Participant who is eligible for disability benefits under section 4.04 of this Appendix G shall receive an immediate monthly pension, calculated as under section 5.01 of this Appendix G, based on his Years of Credited Service under section 3.02 of this Appendix G to his Disability Retirement Date, and reduced (1) by 1/180th for each of the first sixty (60) full calendar months by which his disability retirement precedes his Normal Retirement Date and (2) by 1/360th for each of the next sixty (60) full calendar months.
(b)     Disability benefits determined under this section shall be reduced by any amounts payable on a periodic basis under workers’ compensation, but not by workers’ compensation awards payable in a single sum.

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5.05 Surviving Spouse’s Benefit.
A Missouri Metals Participant (1) who has a surviving Spouse, (2) who at his death has any vested interest in his Accrued Benefit under the Plan, and (3) who either (A) has not yet terminated employment with the Company, the Employer and each Affiliated Entity or (B) has terminated employment with the Company, the Employer and each Affiliated Entity, but whose benefit has not yet commenced, such surviving Spouse shall receive a survivor’s benefit. Such benefit shall be a monthly pension for the life of the Spouse, if then living, commencing on the first day of any month following the earliest date on which the Missouri Metals Participant could have elected to receive immediate retirement benefits, but not later than the date that would have been the Missouri Metals Participant’s Normal Retirement Date, as elected in writing by the Spouse. The benefit shall be equal to the benefit such Spouse would have received if the Missouri Metals Participant (1) had terminated his employment on the earlier of (A) the date of his death or (B) the date of his actual termination of employment, (2) had survived to the benefit commencement date elected by the Spouse under the preceding sentence, (3) had retired with an immediate retirement benefit in the normal form under section 7.01(a) of this Appendix G, and (4) had died on the following day.
5.06     Post-Retirement Death Benefit. In the event of the death of a Missouri Metals Participant after his retirement and election of a form of benefit under Article Seven, his beneficiary shall be entitled to receive any amount which may be payable under the form of benefit in effect.
5.07 Suspension of Benefits on Reemployment.
(a) (1)    If a Missouri Metals Participant is employed in Qualified Reemployment, the benefits otherwise payable to the Missouri Metals Participant shall be suspended for each calendar month in which he continues his Qualified Reemployment. In addition, no benefits shall be paid during the Qualified Reemployment of a Missouri Metals Participant who continues in the employ of the Company, the Employer or an Affiliated Entity after his Normal Retirement Date. The rules relating to such a suspension of benefits and their subsequent resumption are described in this section.
(2) The Administrative Committee shall notify the Missouri Metals Participant by first class mail of the suspension of his pension benefits during the first month in which the Missouri Metals Participant is engaged in Qualified Reemployment.
(3)     Each Missouri Metals Participant receiving benefits under the Plan shall be required to give notice to the Administrative Committee of any employment relationship which such Missouri Metals Participant has with the Company, the Employer or any Affiliated Entity. The Administrative Committee shall have the right to use all reasonable efforts to determine whether such employment constitutes Qualified Reemployment. The Administrative Committee shall also have the right to require the Missouri Metals Participant to provide information sufficient to prove that such employment does not constitute Qualified Reemployment.

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(4)     A Missouri Metals Participant may request the Administrative Committee to make a determination as to whether specific contemplated employment constitutes Qualified Reemployment. The Administrative Committee shall respond to such request in writing within sixty (60) days of the Administrative Committee’s receipt of the request.
(5)     Pension benefit payments to the Missouri Metals Participant will resume (or commence) no later than the first day of the third calendar month following the month in which his Qualified Reemployment ceases or, if later, the first day of the calendar month following receipt by the Administrative Committee of the Missouri Metals Participant’s notice that his Qualified Reemployment has ceased. The initial resumption payment shall include payment for the current month and for all previous calendar months since the cessation of the Missouri Metals Participant’s Qualified Reemployment.
(6)     The Administrative Committee shall offset resumed pension benefits by an amount equal to any pension benefits which were paid to the Missouri Metals Participant with respect to a calendar month in which the Missouri Metals Participant was engaged in Qualified Reemployment. However, the offset to any monthly pension benefit, other than the initial resumption payment, shall not exceed twenty-five percent (25%) of such monthly benefit. Any remaining offset shall be applied to pension benefits payable in subsequent months.
(b)     If a Missouri Metals Participant is employed by the Company, the Employer or an Affiliated Entity under any circumstances other than as described in subsection (a), the benefits otherwise payable to the Missouri Metals Participant shall be continued during such period of reemployment.
5.09     Plan Benefits Frozen. No further benefits shall accrue under the Plan, or any predecessor plan, for any Missouri Metals Employee for any period occurring after December 31, 2000 other than as may be required in accordance with Section 416 of the Code.
ARTICLE SIX
VESTING
6.01     Nonvested Termination . A Missouri Metals Participant who terminates his employment with the Company, the Employer and each Affiliated Entity before:
(i) attaining Normal Retirement Age of 65,
(ii) completing five (5) Years of Service, or
(iii)     the complete or partial termination of the Plan with respect to such Missouri Metals Participant shall have no vested interest in his Accrued Benefit and shall not be entitled to receive a retirement benefit from the Plan.
6.02     Vested Termination . A Missouri Metals Participant who attains Normal Retirement Age of 65 while in the employ of the Company, the Employer or an Affiliated Entity shall

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automatically become 100% vested in his Accrued Benefit. A Missouri Metals Participant who terminates employment with the Company, the Employer and each Affiliated Entity before reaching Normal Retirement Age of 65 shall have his vested interest in his Accrued Benefit determined according to the following schedule:

Years of Service
Vested Percentage

Less than 5
0
5 or more
100

6.03 Payment of Benefit . A Missouri Metals Participant’s Vested Accrued Benefit shall be payable at his Normal or Late Retirement Date, whichever is applicable. If a Missouri Metals Participant terminates employment with the Company, the Employer and each Affiliated Entity before attaining age 55 but after completing 15 Years of Service, such Missouri Metals Participant may, upon reaching attainment of age 55, may elect, in lieu of a benefit payable at Normal Retirement Date, to receive a benefit payable at Early Retirement Date calculated in accordance with the provisions of section 5.03 of this Appendix G
ARTICLE SEVEN
PAYMENT OF BENEFITS
7.01 (a)     If a Missouri Metals Participant has a Spouse on the date that benefit payments begin and he has not elected and his Spouse has not executed a qualified waiver pursuant to subparagraph (c) below, the retirement benefit payable to him shall be in the form of a joint and contingent survivor annuity with fifty percent (50%) continuation to his Spouse. For purposes of this Article, a joint and contingent survivor annuity form of payment shall be a “qualified joint and survivor annuity” as defined in Section 417(b) of the Code. The joint and contingent survivor annuity shall provide for the payment of a retirement benefit to the Missouri Metals Participant commencing as of the first day of the month coincident with or next following his retirement date and continuing during his lifetime and shall further provide for the continuation of a retirement benefit to his Spouse, if living, after the death of the Missouri Metals Participant. The Missouri Metals Participant may, in place of the fifty percent (50%) continuation of a reduced benefit to his Spouse as described above, choose either seventy-five percent (75%) or one hundred percent (100%) continuation of a reduced benefit to his Spouse.
The payment of the retirement benefit to the surviving Spouse shall commence on the first day of the month following the month in which the Missouri Metals Participant dies and shall continue monthly with the last payment due for the month in which the surviving Spouse’s death occurs. It shall be the Missouri Metals Participant’s sole responsibility to keep the Administrative Committee informed of his marital status.

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(b)     All forms of payment other than a life annuity shall be the Actuarial Equivalent of the life annuity form.
(c)     A Missouri Metals Participant may elect to waive the Joint and Contingent Survivor Annuity or designate a contingent annuitant other than his Spouse in accordance with Article VIII of the Plan and the procedures established by the Administrative Committee.
7.02 Life Annuity Form .
(a)     A Missouri Metals Participant may elect a life annuity which provides for a retirement benefit payable only to the Missouri Metals Participant, commencing as of the first day of the month coincident with or next following his retirement date and ceasing with the last payment due for the month in which the Missouri Metals Participant’s death occurs.
(b)     This form may be elected by the Missouri Metals Participant by written notice to the Administrative Committee; however, if such Missouri Metals Participant has a Spouse, such notice must contain the written consent of the Missouri Metals Participant’s Spouse to the waiver of the joint and contingent survivor annuity as prescribed elsewhere in Article VIII of the Plan. The life annuity form will automatically take effect if a Missouri Metals Participant has no surviving Spouse on the date of his retirement and if no other form of payment as described herein has been elected by the Missouri Metals Participant during the ninety (90) day period ending on the Annuity Starting Date.
(c)     If this form has been elected by a Missouri Metals Participant who has a Spouse, and such Missouri Metals Participant dies before the scheduled commencement of retirement benefit payments, his Spouse shall receive monthly benefits in accordance with section 5.05 of this Appendix G. If such Missouri Metals Participant has no eligible Spouse, then no benefit shall be payable under the Plan.
7.03     Lump Sum Distribution . Lump sum payments may be made in accordance with Section 13.10 of the Plan.
If a Missouri Metals Employee is deemed to receive a distribution, and the Missouri Metals Employee resumes employment covered under the Plan before the date the Missouri Metals Employee incurs five consecutive Breaks in Service, upon the reemployment of such Missouri Metals Employee, the Accrued Benefit will be restored to the amount of such Accrued Benefit on the date of such deemed distribution.
7.04      Applicability of Plan . Distributions shall otherwise be governed by the provisions of the Plan, including Article VIII thereof.




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APPENDIX H
PROVISIONS APPLICABLE TO SHOP UNION EMPLOYEES
Notwithstanding any other provisions of the Plan, the following provisions shall apply in determining the amount of benefit for a Shop Union Employee:
SECTION 1
Definitions and Construction
The following terms shall have the meanings defined herein unless a different meaning is clearly indicated by the context.
1.1
“Accrued Benefit” means the amount of retirement income as of the calculation date determined in accordance with Section 3 of this Appendix H.
1.2
“Active Service” means actual performance of duties as a Shop Union Employee.
1.3
“Actuarial Equivalence” means a benefit of equivalent value to the benefit which otherwise would have been provided determined on the basis of the following actuarial assumptions:
Interest 7%
Mortality
The 1971 Group Annuity Mortality Table with no loading, and projected by Scale E, with a one-year age setback for the Shop Union Participant and a five-year setback for any Beneficiary.
Except, the for purposes of applying the limitations of Section 415 of the Code, for distributions with a required beginning date which is on or after January 1, 1994, the following actuarial assumptions shall apply:
Interest
The annual interest rate on 30-year Treasury securities as specified by the Commissioner of Internal Revenue for the month preceding the month as of which Actuarial Equivalence is being determined.





Mortality
The mortality table prescribed by the Secretary of the Treasury under Section 417(e)(3)(A)(ii)(I) of the Code as in effect on the date as of which Actuarial Equivalence is being determined.
1.4
“Beneficiary” means a person(s), trust, or other entity designated by the Shop Union Participant, on a form and in a manner prescribed by the Administrative Committee to receive any benefits which shall be payable under this Plan upon the death of a Shop Union Participant, or in the absence of such designation, the Shop Union Participant’s spouse, if living, or if deceased, the Shop Union Participant’s issue then living, per stirpes, or if none, the Shop Union Participant’s estate.
1.5
“Collective Bargaining Agreement” shall mean the then current collective bargaining agreement between the Company and the Union.
1.6
“Credited Service” means that portion of a Shop Union Participant’s Employment, as determined in accordance with Section 6 of this Appendix H, which will be used in determining the amount of a Shop Union Participant’s retirement benefit under this Plan.
1.7
“Disabled Shop Union Participant” means a Shop Union Participant who incurs a physical or mental condition which, as determined by the Federal Social Security Administration, renders the Shop Union Participant eligible to receive disability benefits under Title II of the Federal Social Security Act, as amended from time to time. If the Shop Union Participant is denied Social Security disability benefits for any reason other than the fact that he is not permanently and totally disabled, then a determination of disability shall be made by a medical doctor selected by the Administrative Committee.
1.8
“Normal Retirement Date” shall mean the first day of the month coinciding with or next succeeding the later of a) the date the Shop Union Participant shall have attained age 65; or b) the 5th anniversary of the date the Shop Union Participant commenced participation in the plan. The Normal Retirement Benefit is nonforfeitable upon attaining the Normal Retirement Date.

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1.9
“Period of Service,” measured in calendar months, means the period commencing in the calendar month during which a Shop Union Employee first performs an hour of service, within the meaning of Section 2530.200b-2(a)(1) of the Department of Labor Regulations, for the Employer and terminating in the calendar month in which the earlier of the following takes place: (i) a Shop Union Employee quits, retires, is discharged or dies, or (ii) the occurrence of the first anniversary of the date on which a Shop Union Employee has been absent from service with the Company for reasons other than those listed in (i) above, provided that if a Shop Union Participant is absent on an approved leave of absence that extends beyond such one-year period, such period of absence shall be included in his Period of Service to the same extent that he would accrue seniority as provided for in the Collective Bargaining Agreement; and provided further that any period during which a Shop Union Employee retains seniority rights under the Collective Bargaining Agreement for recall purposes shall be included in his Period of Service if such Shop Union Employee returns to Active Service within such period. If the Shop Union Employee does not return to Active Service within such period, whether by reason of not being recalled or by reason of being recalled but not returning to Active Service, his Period of Service shall terminate on the earlier of (i) or (ii) above.
1.10
“Pre-Retirement Surviving Spouse Option” means the pre-retirement surviving spouse benefit described in Section 7.4 of this Appendix H.
1.11
“Separation from Service Date” means the date on which a Shop Union Participant’s Period of Service ends.
1.12
“Shop Union Employee” shall mean any hourly employee employed by the Company and who is represented by the Union under the terms and provisions of the Collective Bargaining Agreement, or who pays dues to the Union.
1.13
“Shop Union Participant” shall mean a Shop Union Employee who is participating in the Plan under the provisions of Section 2 of this Appendix H, or a former employee who is receiving benefits under the plan or who has vested rights under the Plan.

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1.14
“Surviving Spouse Option” shall mean the normal form of retirement benefit payable to a married Shop Union Participant under the provisions of Section 7.1(b) of this Appendix H.
1.15
“Union” shall mean the PerkinElmer/John Crane/EKK Eagle Shop Union.
1.16
“Years of Service” shall mean that portion of a Shop Union Employee’s Employment, as determined in accordance with Section 4 of this Appendix H, which will be used in determining a Shop Union Participant’s eligibility for a retirement benefit under the Plan.
The masculine gender words include both sexes, the single includes the plural and the plural includes the single, unless the context otherwise requires.
SECTION 2
Participation
2.1 General
Each Shop Union Employee who was a Shop Union Participant in the Plan as of the Transaction Date (as defined in Section 2.3 of this Appendix H) shall continue to participate in accordance with the provisions of the amended Plan and this Appendix H. Each Shop Union Employee shall become a Shop Union Participant after the completion of a Period of Service of 60 days. For purposes of this Section 2.1 of this Appendix H, a Shop Union Employee shall be deemed to have completed a Period of Service of 60 days if he is still in the employ of the Company two months after his date of hire (i.e., after he completes his first hour of service).
2.2 Former Employees
A former Shop Union Employee receiving or entitled to receive a retirement benefit under the Plan shall continue as a Shop Union Participant until the date of his death.
2.3 Sale of Division

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Active Shop Union Participants ceased to be employed by the Company as of December 6, 2005 (the “Transaction Date”). Any such Shop Union Participant who remains fully employed through the Transaction Date shall have a fully vested and nonforfeitable right to his Accrued Benefit as determined as of the Transaction Date. No further benefits shall accrue under the Plan, or any predecessor plan of the Company, for Shop Union Participants for any period after the Transaction Date. No Shop Union Employee shall first become a Shop Union Participant after the Transaction Date.
SECTION 3
Amount of Retirement Income
3.1 General
In order to establish his eligibility for a pension benefit, a Shop Union Participant shall file an application for such benefit on a form and in a manner prescribed by the Administrative Committee.
3.2 Normal Retirement Income
A Shop Union Participant retiring on or after his Normal Retirement Date shall be entitled to receive a monthly retirement income for life, with payments guaranteed for sixty (60) months, payable from his Normal Retirement Date, which shall be equal to the product of the Shop Union Participant’s years of Credited Service multiplied by the dollar amount as may be specified in the then current Collective Bargaining Agreement at the time of the Shop Union Participant’s termination of Employment. If a Shop Union Participant retires after his Normal Retirement Date, his accrued benefit shall not be less than the greater of: (i) the Actuarial Equivalence of the benefit payable at his actual retirement date; or (ii) the benefit payable at the beginning of the year of his actual retirement date plus the additional accrual earned for service during the year.
3.3 Early Retirement Income

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A Shop Union Participant retiring on an Early Retirement Date shall be entitled to receive a retirement income which shall be determined in accordance with either (a) or (b) below, as elected by the Shop Union Participant:
(a)
The Shop Union Participant may elect to defer commencement of his retirement income until his Normal Retirement Date. The amount of his retirement income will be determined in accordance with Section 3.2 of this Appendix H based on his Credited Service as of his Early Retirement Date.
(b)
The Shop Union Participant may elect at his Early Retirement Date or at any time prior to his Normal Retirement Date to have his retirement income commence on the first day of any month after the date of his retirement but no later than his Normal Retirement Date. The amount of his retirement income shall be equal to the amount calculated in accordance with Section 3.2 of this Appendix H reduced by one-half percent for each month by which the date that retirement payments are to commence precedes his Normal Retirement Date.
3.4 Termination Prior to Retirement
(a)
A Shop Union Participant whose Employment terminates prior to retirement but after the completion of at least 5 Years of Service, by reason of quit, discharge, death, or having become a Disabled Shop Union Participant as defined in Section 1.7 of this Appendix H, shall be 100% vested in his or her accrued benefit, and except as provided in subparagraphs (b) through (d) below, such Shop Union Participant shall be entitled to receive a monthly retirement income for life, with payments guaranteed for sixty (60) months, payable from such Shop Union Participant’s Normal Retirement Date, which monthly retirement income shall be determined in accordance with Section 3.2 of this Appendix H, based upon the benefit schedule in effect on the date of his termination. Such a Shop Union Participant shall also be eligible to elect an Early Retirement Date, in which case the amount of his retirement income shall be determined in accordance with

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Section 4.3(b) and shall be paid in accordance with the provisions of Article VIII of the Plan.
(b)
Provided, however, that if the Shop Union Participant’s Employment shall have terminated on account of such Shop Union Participant having become a Disabled Shop Union Participant as defined in Section 1.7, and such Shop Union Participant as of his or her death had attained age 45 and completed at least 15 Years of Service, such Shop Union Participant’s entitlements to benefits shall be determined under Section 5 of this Appendix H rather than under this Section 3.4 of this Appendix H.
(c)
Provided further that if the Shop Union Participant’s Employment terminates by reason of death and such Shop Union Participant has an Eligible Spouse, such Eligible Spouse shall receive a benefit as described in Article VIII of this Plan and no benefit shall be payable under this Section 3.4 of this Appendix H.
(d)
Provided further that if the Shop Union Participant’s Employment terminates by reason of death and such Shop Union Participant is unmarried, the Shop Union Participant’s Beneficiary shall be entitled to the same 60 months certain benefit that would have been payable to the Shop Union Participant and such Beneficiary had the deceased Shop Union Participant elected an Early Retirement Benefit under Section 3.3(b) of this Appendix H which commenced on the first day of the month of his death.
3.5 Re-Employment of Retired Shop Union Participant
In the event a retired Shop Union Participant is re-employed by the Company, his retirement income shall be suspended during the period of such re-employment, and he shall become eligible to accrue Credited Service in accordance with the terms of the Plan. Upon his subsequent retirement, his retirement income shall be reduced by the Actuarial Equivalence of any retirement income payments made to him prior to the earlier of his re-employment or his Normal Retirement Date.

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3.6 Early Retirement Incentive - December 10, 2001 to January 31, 2002
Notwithstanding any other provision of this Plan, any Shop Union Participant who has reached age 62 by December 1, 2001, who has not previously arranged his retirement and who elects to retire during the period December 10, 2001 to January 31, 2002 may elect to increase his age for purposes of the Plan and/or his Credited Service for purposes of the Plan by a number or numbers totaling 3 for purposes of computing his eligibility for and amount of benefits under the Plan. In a case where the number of years totaling 3 is to be split between age and Credited Service, the Shop Union Participant may increase either age or Credited Service by whole years or by twelfths of whole years. To be eligible for increased retirement benefits under this subsection, the Shop Union Participant must execute a release of claims agreement in the form prescribed by the Administrative Committee. Not more than two Shop Union Participants per Company department and not more than 8 Shop Union Participants in all shall be eligible to retire as provided in this subsection. In the event that more than 2 Shop Union Participants per Company department or 8 Shop Union Participants in all wish to take advantage of the election under this subsection, the seniority rules as provided in the Collective Bargaining Agreement will apply.
SECTION 4
Years of Service
4.1 General
A Shop Union Participant’s eligibility for retirement income benefits under the Plan shall be based on his Years of Service. Years of Service shall be determined in accordance with Section 4.2 of this Appendix H below.
4.2 Determination of Years of Service
A Shop Union Participant’s Years of Service for vesting purposes shall be determined in accordance with the following:

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(a)
For a Shop Union Participant who as of the Effective Date had been covered under the prior provisions of the Plan, the Shop Union Participant’s continuous service with the Company prior to the Effective Date, determined in accordance with the provisions of the Plan in effect prior to the Effective Date, shall be counted as Years of Service.
(b)
Subject to Section 4.2(a) of this Appendix H, a Shop Union Participant who has attained age 18 shall accrue 1/12th of a Year of Service for each calendar month after the Effective Date within the Shop Union Participant’s Period of Service. If a Shop Union Participants Employment is terminated (either voluntarily or involuntarily) and he is later reemployed into Active Service within 12 months, the period between his Separation from Service Date and the date of reemployment shall be included in his Years of Service. However, if his Employment is terminated while absent from Active Service for reasons other than a quit, discharge, or retirement (e.g., leave of absence), Years of Service shall be counted for the period from his Separation from Service Date to the date of reemployment only if he is reemployed within 12 months of the first day of that absence.
(c)
Upon the re-employment of a Shop Union Participant who had previously been a Shop Union Participant on or after the Effective Date, his Years of Service shall be reinstated as of the date of his re-employment.
(d)
In no event shall a Shop Union Participant be deemed to receive credit for more than one Year of Service with respect to any Year.
4.3
For purposes of Section 4.2(b) of this Appendix H, a Shop Union Participant shall be considered as accruing Years of Service in accordance with his normal workweek for each month.
(a)
Where specifically required by ERISA all or part of the Shop Union Participant’s service with a member of the same controlled group (as such term is defined in

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IRC Section 1563), while such member was a member of the same controlled group, immediately preceding or following Employment with the Company, shall be counted as Years of Service. Such Years of Service shall be determined in accordance with the provisions of this Section 4 of this Appendix H. The following situations in (a)(i) through (a)(iii) are specifically excepted from being counted as Years of Service unless otherwise required by ERISA.
(i)
The Administrative Committee shall not give credit for service with a controlled group member immediately preceding or following Employment with the Company under any of the following conditions:
1)
The controlled group member was not a part of the same controlled group at the time the service was rendered, or
2)
The controlled group member at the time the service was rendered maintained a qualified plan which required voluntary contributions from the Shop Union Employee as a prerequisite for participation and the Shop Union Employee elected not to participate, or
3)
The controlled group member at the time the service was rendered maintained a qualified plan which provided in the terms of such plan that certain service was not to be counted in determining Years of Service.
SECTION 5
Disability Pension Benefit
5.1
A Shop Union Participant who has attained age 45 and completed at least 15 Years of Service, and who becomes a Disabled Shop Union Participant while a Shop Union Employee, will be eligible to receive a disability pension benefit upon proper application to the Plan.

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5.2
The amount of a disability pension benefit shall be calculated as if such Disabled Shop Union Participant had attained age 65 prior to such disability, based on the Years of Service that have been credited to such Disabled Shop Union Participant upon application for the disability pension benefit. The amount of a disability pension benefit shall not be actuarially reduced based on the Disabled Shop Union Participant’s failure to attain age 65.
5.3
A Disabled Shop Union Participant may elect to receive a disability pension benefit in any form of distribution otherwise available under Section 7 of this Appendix H to a Shop Union Participant who has attained his Normal Retirement Date. Specifically, a Disabled Shop Union Participant may elect to receive his disability pension benefit in the form of one of the following: (1) a lifetime income, with payments guaranteed for 60 months; (2) a Surviving Spouse Option (with payments calculated by also increasing the age of the Shop Union Participant’s Eligible Spouse by the number of days between the Shop Union Participant’s actual age and age 65, and with lifetime payments to the surviving Eligible Spouse equal to 50%, 66-2/3%, or 100% of the Shop Union Participant’s monthly pension); or (3) a lifetime income option.
Notwithstanding the above, a Disabled Shop Union Participant who is married may be required to sign a waiver and/or obtain a spousal consent, with respect to an election to obtain a disability pension benefit in any form of payment other than a Surviving Spouse Option in favor of his surviving Eligible Spouse.
5.4
Disability pension benefit payments shall be suspended in the event that a Shop Union Participant receiving a disability pension benefit is no longer determined to be a Disabled Shop Union Participant, as defined in Section 1.7 of this Appendix H. In the event that a disability pension benefit is suspended, payments may resume as early or normal retirement benefits, with any early retirement benefit reduced in accordance with Section 3.3(b) of this Appendix H if not deferred to the Shop Union Participant’s Normal Retirement Date, once the Shop Union Participant otherwise qualifies for a Normal Retirement Income or an Early Retirement Income.

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5.5
Upon the attainment of his Normal Retirement Date, a Disability Shop Union Participant’s disability pension benefit shall be converted to a Normal Retirement Income (subject to the waiver and spousal consent requirements of Article VIII if the Disabled Shop Union Participant is married), with the Shop Union Participant having the right to elect any form of distribution otherwise available to a Shop Union Participant who has attained his Normal Retirement Date.
5.6
Notwithstanding anything to the contrary, a Shop Union Participant shall not accrue any further Years of Service or Credited Service for any period with respect to, or during, which he is receiving a disability pension benefit pursuant to this Section 5 of this Appendix H.
SECTION 6
Credited Service
6.1
A Shop Union Participant’s years of Credited Service shall be determined in accordance with the following:
(a)
For a Shop Union Participant as of the Effective Date, who has been covered under the prior provisions of the Plan, the Shop Union Participant’s period of continuous employment with the Company prior to the Effective Date, determined in accordance with the provisions of the Plan in effect prior to the Effective Date, shall be counted as years of Credited Service.
(b)
A Shop Union Participant shall accrue 1/12th of a year of Credited Service for each calendar month within the Period of Service.
(c)
A Shop Union Participant shall in no event be deemed to accrue more than one full year of Credited Service with respect to any Plan Year.
(d)
Upon the re-employment of a Shop Union Participant who had previously been a Shop Union Participant on or after the Effective Date, his years of Credited

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Service accrued during his prior period of Employment shall be reinstated as of the date of his re-employment.
SECTION 7
Payment of Retirement Benefits
7.1 Normal form of Payment
The retirement income to which a Shop Union Participant may be entitled at his Normal or Early Retirement Date shall be payable in the following method unless the Participant elections one of the optional forms of payments provided in Section 7.2 of this Appendix H.
(a)
The retirement income payable to a Shop Union Participant at his Normal Retirement Date who does not have an Eligible Spouse on the date payments commence shall be in the form of a lifetime income, with payments guaranteed for sixty (60) months, in an amount calculated in accordance with Section 3.2 of this Appendix H.
(b)
The retirement income payable to a Shop Union Participant who has an Eligible use on the date payments commence shall be in the form of a Surviving Spouse Option with his Eligible Spouse as the survivor, subject to the following:
(i)
Under a Surviving Spouse Option, a reduced amount shall be paid to the Shop Union Participant for his lifetime, and his Eligible Spouse, if surviving at the Participant’s death, shall be entitled to receive thereafter a lifetime benefit equal to 50 percent, 66-2/3 percent or 100 percent (depending on the election made) of the reduced benefit which had been payable to the Participant. The amount of the reduced benefit payable to the Participant and survivor shall be the Actuarial Equivalence of the lifetime benefit as determined in Section 3.2 of this Appendix H.
(ii)
The Surviving Spouse Option may be waived pursuant to Article VIII.

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7.2 Optional Forms of Payments
A Shop Union Participant may elect, at any time prior to 60 days preceding the commencement of his retirement income, by giving written notice on a form and in a manner prescribed by the Administrative Committee, to convert the amount of retirement income payable to him under the normal form of payment into the Actuarial Equivalence under one of the following options:
(a)
Lifetime Income Option . Under this option, retirement income will cease at the death of the Shop Union Participant.
(b)
Joint and Survivor Option . Under this option, a married Shop Union Participant can elect to receive a reduced income, but after the Shop Union Participant’s death 50%, 66 2/3% or 100% (depending on the election made) of such reduced income shall be paid for life to his designated joint annuitant.
(c)
Five (5) Year Certain Option . Under this option, retirement income shall be in the form of a lifetime income with payments guaranteed for 60 months.
7.3 Election Process .
Elections shall be made in accordance with the procedures established by the Administrative Committee.
7.4 Pre-Retirement Surviving Spouse Option
In the event a Shop Union Participant is married and dies before his retirement date, his Eligible Spouse shall receive a Pre-Retirement Surviving Spouse Option unless such benefit is waived in accordance with Article VIII. If a vested Shop Union Participant who has not revoked the Pre-Retirement Surviving Spouse Option dies before his retirement date, he will be deemed to have: (a) terminated employment on the date of death (unless he had terminated employment prior to his death), (b) survived to his Early Retirement Date, (c) retired on his Early Retirement Date with an immediate 50% Surviving Spouse Option; and (d) died on the date after his Early Retirement Date.

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7.5 Applicability of Plan
Distributions shall otherwise be governed by the provisions of the Plan, including Article VIII thereof.

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EXHIBIT 12.1
 
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
 
PerkinElmer, Inc.
Computation of Ratio of Earnings to Fixed Charges
(Unaudited)
 
 
Fiscal Year Ended  
 
December 30,
2012
 
January 1,
2012
 
January 2,
2011
 
January 3,
2010
 
December 28,
2008
 
(In thousands, except for ratio)
Fixed charges:
 
 
 
 
 
 
 
 
 
Interest expense and amortization of debt premiums and discounts on all indebtedness
$
43,702

 
$
23,310

 
$
15,393

 
$
15,765

 
$
23,625

Interest on rental expense
12,053

 
9,820

 
9,360

 
7,240

 
7,300

Total fixed charges
55,755

 
33,130

 
24,753

 
23,005

 
30,925

Earnings:
 

 
 

 
 

 
 

 
 

Income from continuing operations before income taxes
50,587

 
64,354

 
165,951

 
100,159

 
31,843

Earnings available to cover fixed charges
$
106,342

 
$
97,484

 
$
190,704

 
$
123,164

 
$
62,768

Ratio of earnings to fixed charges
1.9

 
2.9

 
7.7

 
5.4

 
2.0

Deficiency in earnings required to cover fixed charges
$
—

 
$
—

 
$
—

 
$
—

 
$
—






EXHIBIT 21
Subsidiaries of the Registrant
As of February 26, 2013 , the following is a list of the parent (Registrant) and its active subsidiaries, together with their subsidiaries. Except as noted, all voting securities of the listed subsidiaries are 100% beneficially owned by the Registrant or a subsidiary thereof. The subsidiaries are arranged alphabetically by state and then country of incorporation or organization.

 
Name of Company
 
State or Country
of Incorporation
or Organization
 
Name of Parent
1.
PerkinElmer, Inc.
 
Massachusetts
 
N/A
2.
Caliper Life Sciences, Inc.
 
Delaware
 
PerkinElmer Holdings, Inc.
3.
Cambridge Research & Instrumentation, Inc.
 
Delaware
 
Caliper Life Sciences, Inc.
4.
CambridgeSoft Corporation
 
Delaware
 
PerkinElmer Holdings, Inc.
5.
PerkinElmer Health Sciences, Inc.
 
Delaware
 
PerkinElmer Holdings, Inc.
6.
ViaCell, Inc.
 
Delaware
 
PerkinElmer Holdings, Inc.
7.
ViaCord, LLC
 
Delaware
 
ViaCell, Inc.
8.
VisEn Medical Inc.
 
Delaware
 
PerkinElmer Health Sciences, Inc.
9.
Xenogen Corporation
 
Delaware
 
Caliper Life Sciences, Inc.
10.
NovaScreen Biosciences Corporation
 
Maryland
 
Caliper Life Sciences, Inc.
11.
PerkinElmer Holdings, Inc.
 
Massachusetts
 
PerkinElmer, Inc.
12.
PerkinElmer Labs, Inc.
 
New York
 
PerkinElmer Holdings, Inc.
13.
PerkinElmer Genetics, Inc.
 
Pennsylvania
 
PerkinElmer Holdings, Inc.
14.
PerkinElmer Automotive Research, Inc.
 
Texas
 
PerkinElmer Holdings, Inc.
15.
Geospiza, Inc.
 
Washington
 
PerkinElmer Holdings, Inc.
16.
Signature Genomic Laboratories, LLC
 
Washington
 
PerkinElmer Health Sciences, Inc.
17.
Perkin-Elmer Argentina S.R.L.
 
Argentina
 
PerkinElmer Holdings, Inc.
18.
PerkinElmer Pty. Ltd.
 
Australia
 
PerkinElmer Holdings, Inc.
19.
PerkinElmer Vertriebs GmbH
 
Austria
 
Wellesley B.V.
20.
Caliper Life Sciences Benelux NV
 
Belgium
 
Caliper Life Sciences Europe
21.
Caliper Life Sciences Europe
 
Belgium
 
Caliper Life Sciences, Inc.
22.
PerkinElmer Cellular Sciences Belgium Sprl
 
Belgium
 
Wellesley B.V. 1
23.
PerkinElmer NV
 
Belgium
 
PerkinElmer Life Sciences International Holdings 2
24.
PerkinElmer do Brasil Ltda.
 
Brazil
 
PerkinElmer International C.V. (94.6%) 3
25.
Power Ability Limited
 
British Virgin Islands
 
PerkinElmer Holding Luxembourg S. à r.l.
26.
Caliper Life Sciences Ltd.
 
Canada
 
Caliper Life Sciences, Inc.
27.
PerkinElmer BioSignal, Inc.
 
Canada
 
PerkinElmer Life Sciences International Holdings
28.
PerkinElmer Canada Investments Company
 
Canada
 
PerkinElmer Investments B.V.
29.
PerkinElmer Health Sciences Canada Inc.
 
Canada
 
PerkinElmer BioSignal, Inc.
30.
PerkinElmer Investments Ltd. Partnership
 
Canada
 
PerkinElmer Holding Luxembourg S.à r.l. 4   
31.
PerkinElmer Sciex Instruments
 
Canada
 
PerkinElmer Health Sciences, Inc. (99%) 5   
32.
PerkinElmer Chile Ltda.
 
Chile
 
PerkinElmer Holdings, Inc. 6   
33.
PerkinElmer Instruments (Shanghai) Co., Ltd.
 
China
 
PerkinElmer Singapore Pte Ltd.
34.
Shanghai Haoyuan Biotech Co., Ltd.
 
China
 
Power Ability Limited

35.
Shanghai Sym-Bio Lifescience Co., Ltd.
 
China
 
PerkinElmer IVD Pte Ltd.
36.
Suzhou Sym-Bio Lifescience Co., Ltd.
 
China
 
Shanghai Sym-Bio Lifescience Co., Ltd.
37.
PerkinElmer Danmark A/S
 
Denmark
 
Wallac Oy
38.
PerkinElmer Finland Oy
 
Finland
 
Wallac Oy
39.
PerkinElmer Investments Ky
 
Finland
 
PerkinElmer Finance Luxembourg S.à r.l. 7   
40.
PerkinElmer Oy
 
Finland
 
Wellesley B.V.
41.
Wallac Oy
 
Finland
 
PerkinElmer Oy
42.
Caliper Life Sciences S.A.
 
France
 
Caliper Life Sciences, Inc.
43.
Labmetrix Technologies I&T SA
 
France
 
PerkinElmer SAS
44.
PerkinElmer SAS
 
France
 
PerkinElmer Nederland B.V.
45.
Caliper Life Sciences GmbH
 
Germany
 
Caliper Life Sciences, Inc.
46.
PerkinElmer Cellular Technologies Germany GmbH
 
Germany
 
PerkinElmer LAS (Germany) GmbH




 
Name of Company
 
State or Country
of Incorporation
or Organization
 
Name of Parent
47.
PerkinElmer chemagen Technologie GmbH
 
Germany
 
PerkinElmer Holding Luxembourg S.à r.l.
48.
PerkinElmer Holding GmbH
 
Germany
 
PerkinElmer Cellular Technologies Germany GmbH
49.
PerkinElmer LAS (Germany) GmbH
 
Germany
 
PerkinElmer Holdings, Inc.
50.
PerkinElmer Technologies GmbH & Co. KG
 
Germany
 
PerkinElmer Cellular Technologies Germany GmbH
 (58%) 8   
51.
PerkinElmer (Hong Kong) Limited
 
Hong Kong
 
PerkinElmer Holdings, Inc.
52.
PerkinElmer (India) Private Limited
 
India
 
PerkinElmer Singapore Pte Ltd. 9  
53.
PerkinElmer Health Sciences Private Limited
 
India
 
PerkinElmer IVD Pte Ltd. (85%) 10   
54.
PerkinElmer (Ireland) Ltd.
 
Ireland
 
Wellesley B.V.
55.
Perkin Elmer Italia SpA
 
Italy
 
PerkinElmer Srl
56.
PerkinElmer LAS Srl
 
Italy
 
PerkinElmer Holdings B.V.
57.
PerkinElmer Srl
 
Italy
 
Wellesley B.V.
58.
PerkinElmer Japan Co. Ltd.
 
Japan
 
PerkinElmer Life Sciences International Holdings (97%) 11   
59.
Perkin Elmer Yuhan Hoesa
 
Korea
 
PerkinElmer International C.V.
60.
PerkinElmer Finance Luxembourg S.à r.l.
 
Luxembourg
 
PerkinElmer Holding Luxembourg S.à r.l.
61.
PerkinElmer Holding Luxembourg S.à r.l.
 
Luxembourg
 
PerkinElmer International C.V.
62.
Perkin Elmer Sdn. Bhd.
 
Malaysia
 
PerkinElmer International C.V.
63.
Perkin Elmer de Mexico, S.A.
 
Mexico
 
PerkinElmer Holdings, Inc. 12   
64.
Lumac LSC B.V.
 
Netherlands
 
PerkinElmer Health Sciences B.V.
65.
PerkinElmer Health Sciences B.V.
 
Netherlands
 
PerkinElmer Life Sciences International Holdings
66.
PerkinElmer Holdings B.V.
 
Netherlands
 
PerkinElmer Holdings, Inc.
67.
PerkinElmer International C.V.
 
Netherlands
 
PerkinElmer Holdings, Inc. 13   
68.
PerkinElmer Investments (Netherlands) B.V.
 
Netherlands
 
PerkinElmer International C.V.
69.
PerkinElmer Nederland B.V.
 
Netherlands
 
Wellesley B.V.
70.
Wellesley B.V.
 
Netherlands
 
PerkinElmer Holding Luxembourg S.à r.l.
71.
PerkinElmer Norge AS
 
Norway
 
Wallac Oy
72.
PerkinElmer Instruments (Philippines) Corporation
 
Philippines
 
PerkinElmer Holdings, Inc.
73.
PerkinElmer Polska Sp zo.o.
 
Poland
 
Wellesley B.V.
74.
PerkinElmer Shared Services Sp zo.o.

 
Poland
 
Wellesley B.V.
75.
PerkinElmer IVD Pte Ltd.
 
Singapore
 
Wallac Oy
76.
PerkinElmer Singapore Pte Ltd.
 
Singapore
 
PerkinElmer International C.V.
77.
PerkinElmer South Africa (Pty) Ltd.

 
South Africa
 
Wellesley B.V.
78.
PerkinElmer España, S.L.
 
Spain
 
Wellesley B.V.
79.
PerkinElmer Sverige AB
 
Sweden
 
Wallac Oy
80.
Caliper Life Sciences AG
 
Switzerland
 
Caliper Life Sciences, Inc.
81.
PerkinElmer (Schweiz) AG
 
Switzerland
 
Wellesley B.V.
82.
PerkinElmer Taiwan Corporation
 
Taiwan
 
PerkinElmer International C.V.
83.
PerkinElmer Limited
 
Thailand
 
PerkinElmer, Inc.
84.
Caliper Lifesciences Ltd.
 
United Kingdom
 
Caliper Life Sciences, Inc.
85.
CambridgeSoft Limited
 
United Kingdom
 
CambridgeSoft Corporation
86.
Dexela Limited
 
United Kingdom
 
PerkinElmer Holding Luxembourg S.à r.l.
87.
Dexela Software Limited
 
United Kingdom
 
Dexela Limited
88.
PerkinElmer Improvision Ltd.

 
United Kingdom
 
PerkinElmer (UK) Holdings Ltd.
89.
PerkinElmer (UK) Holdings Ltd.
 
United Kingdom
 
Wellesley B.V.
90.
PerkinElmer (UK) Ltd.
 
United Kingdom
 
PerkinElmer (UK) Holdings Ltd.
91.
PerkinElmer LAS (UK) Ltd.
 
United Kingdom
 
PerkinElmer (UK) Holdings Ltd.
92.
PerkinElmer Life Sciences International Holdings
 
United Kingdom
 
PerkinElmer Health Sciences, Inc.
93.
PerkinElmer Ltd.
 
United Kingdom
 
PerkinElmer (UK) Holdings Ltd.


____________________________
1  
PerkinElmer International C.V. owns a de minimus share.
2  
PerkinElmer, Inc. owns a de minimus share.
3  
PerkinElmer Holdings, Inc. owns 5%; PerkinElmer Health Sciences, Inc. owns .4%.




4  
PerkinElmer Holdings, Inc. owns a de minimus share.
5  
PerkinElmer Holdings, Inc. owns 1%.
6  
PerkinElmer Health Sciences, Inc. owns a de minimus share.
7  
PerkinElmer Holding Luxembourg S.à r.l. owns 1%.
8  
PerkinElmer Automotive Research, Inc. owns 40%; PerkinElmer Holding GmbH owns 2%.
9  
Wellesley B.V. owns a de minimus share.
10  
Surendra Genetic Laboratory & Research Centre Pte Ltd. owns 15%.
11  
Wallac Oy owns 3%.
12  
PerkinElmer, Inc. owns a de minimus share.
13  
PerkinElmer, Inc. owns 1%.











EXHIBIT 23
 
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
We consent to the incorporation by reference in Registration Statement Nos. 333-61615, 333-65367, 333-81759, 333-61938, 333-73350, 333-92228, 333-129407 and 333-158877 on Form S-8 and 333-165935 on Form S-3 of our reports dated February 26, 2013 , relating to the financial statements and financial statement schedule of PerkinElmer, Inc., and the effectiveness of PerkinElmer, Inc.'s internal control over financial reporting, appearing in this Annual Report on Form 10-K of PerkinElmer, Inc. for the year ended December 30, 2012 .
 
 
 
/s/ DELOITTE & TOUCHE LLP
 
Boston, Massachusetts
February 26, 2013





CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302
 
EXHIBIT 31.1
 
CERTIFICATION
 
I, Robert F. Friel, certify that:
 
1.
I have reviewed this Annual Report on Form 10-K of PerkinElmer, Inc.;
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
 
 
 
Date:
February 26, 2013
/ S /    R OBERT  F. F RIEL        
 
 
 
Robert F. Friel
 
 
Chairman, Chief Executive Officer and President





CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302
 
EXHIBIT 31.2
 
CERTIFICATION
 
I, Frank A. Wilson, certify that:
 
1.
I have reviewed this Annual Report on Form 10-K of PerkinElmer, Inc.;
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
 
 
 
Date:
February 26, 2013
/s/    F RANK  A. W ILSON        
 
 
 
Frank A. Wilson
Senior Vice President and Chief Financial Officer







CERTIFICATION OF CEO AND CFO PURSUANT TO SECTION 906
 
EXHIBIT 32.1
 
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Annual Report on Form 10-K of PerkinElmer, Inc. (the “Company”) for the period ended December 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Robert F. Friel, Chairman, Chief Executive Officer and President of the Company, and Frank A. Wilson, Senior Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1)
Based on my knowledge, the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)
Based on my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
  
 
 
 
Date:
February 26, 2013
/ S /    R OBERT  F. F RIEL        
 
 
 
Robert F. Friel
 
 
Chairman, Chief Executive Officer and President
 
 
 
 
 
Date:
February 26, 2013
/s/    F RANK  A. W ILSON        
 
 
 
Frank A. Wilson
Senior Vice President and Chief Financial Officer