REVVITY INC
For the period ended Dec 29, 2024. Filed Feb 25, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 25, 2025
RVTY$155.11+2.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-27.
0000031791-24-000004
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-29; filed 2025-02-25.
0000031791-25-000009
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 85 previous paragraphs and 80 current paragraphs.
42 unchanged; 30 reworded; 7 added; 13 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Our consolidated gross margin decreased 16 basis points in fiscal year 2024, as compared to fiscal year 2023, primarily due to an unfavorable shift in product mix and higher product costs, partially offset by pricing actions and productivity initiatives. Our consolidated operating margin increased 166 basis points in fiscal year 2024, as compared to fiscal year 2023, due to productivity initiatives and cost containment.
Current report
The variation in our effective tax rate from the statutory ratefor fiscal year 2024 was primarily the result of general business tax credits of $17.6 million, a prior year true-up related to the tax on foreign earnings of approximately $9.4 million, and favorability in our U.S. taxation of multinational operations of $28.9 million, which were partially offset by an increase in valuation allowance of $29.8 million. The variation in our effective tax rate from the statutory tax rate for fiscal year 2023 was primarily the result of a favorable ruling from a foreign tax authority of approximately $15.2 million, a prior year true-up related to the tax on foreign earnings of approximately $7.0 million, and a benefit for the state tax rate change on deferred taxes of $12.8 million, which were partially offset by an increase in tax reserves of approximately $33.2 million in respect of unfavorable developments with respect to an uncertain tax position with a foreign tax authority that was partially related to continuing operations.
Current report
Reporting Segment Results
Current report
Segment operating income for fiscal year 2024 was $372.4 million, as compared to $320.1 million for fiscal year 2023, an increase of $52.3 million, or 16%. Segment operating margin increased 286 basis points in fiscal year 2024, as compared to fiscal year 2023, primarily dueto higher volume, productivity initiatives, and cost containment.
Current report
We project an increase in capital expenditures in fiscal year 2025 relative to fiscal year 2024. This planned increase reflects our strategic commitment to enhancing our digital capabilities, product innovations, and realigning our production infrastructure. We anticipate funding these initiatives through a combination of our existing cash reserves and internally generated funds from our continuing operations, ensuring a prudent approach to financial management while pursuing these critical growth and optimization strategies.
Current report
In connection with the sale of the Business, we expect to receive the remaining balance related to the Brand Fee of $56.3 million as of December 29, 2024, in installments through fiscal year 2025.
Current report
As of the November 1, 2024 impairment testing, the fair value of each of our reporting units substantially exceeded the respective carrying value of each reporting unit with the exception of the Life Sciences reporting unit. The Life Sciences reporting unit, which had a goodwill balance of $4,332.5 million at December 29, 2024, had a fair value that exceeded its carrying value by more than 10% but less than 20% as of the November 1, 2024 impairment testing date. While we believe that our estimates used in measuring fair value are reasonable, if actual results differ from the estimates and judgments used, including estimates of future revenue growth and volatility in discount rate, impairment charges may be incurred in the future.
Removed paragraphs (13)
Previous report
Our consolidated gross margins decreased 411 basis points in fiscal year 2023, as compared to fiscal year 2022, primarily due to lower revenue from COVID-19 product offerings, and an unfavorable shift in product mix, partially offset by pricing actions. Our consolidated operating margin decreased 1,150 basis points in fiscal year 2023, as compared to fiscal year 2022, also due to lower revenue from COVID-19 product offerings and unfavorable shift in product mix, partially offset by operating expense reductions.
Previous report
Cost of revenue for fiscal year 2023 was $1,210.9 million, as compared to $1,322.0 million for fiscal year 2022, a decrease of approximately $111.1 million, or 8%. As a percentage of revenue, cost of revenue increased to 44% in fiscal year
Previous report
Certain countries in which we have operations have adopted legislation or are expected to adopt legislation influenced by the OECD Pillar Two rules, which imposes a minimum tax rate of 15% among other requirements. We will continue to evaluate the potential consequences of Pillar Two legislation on our effective tax rate as the legislation and related interpretations of OECD guidance continues to evolve.
Previous report
Reporting Segment Results of Continuing Operations
Previous report
Segment operating income from continuing operations for fiscal year 2023 was $320.9 million, as compared to $782.0 million for fiscal year 2022, a decrease of $461.1 million, or 59%. Segment operating margin decreased 1,670 basis points in fiscal year 2023, as compared to fiscal year 2022, primarily dueto lower COVID-19 product sales volume and an unfavorable shift in product mix, partially offset by cost controls.
Previous report
During fiscal year 2024, we expect to invest an amount for capital expenditures similar to that in fiscal year 2023, 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.
Previous report
At December 31, 2023, we had cash and cash equivalents of $913.2 million, of which $429.0 million was held by our non-U.S. subsidiaries, and we had $1.49 billion of additional borrowing capacity available under a senior unsecured revolving credit facility. We had no other liquid investments at December 31, 2023. At December 31, 2023, we had investments in U.S. treasury securities with a carrying amount of $689.9 million whose proceeds upon maturity are intended to be utilized to repay our outstanding 2024 Notes.
Previous report
In connection with the sale of the Business, we are entitled to an additional $75.0 million in proceeds as consideration for our ceasing the use of the PerkinElmer brand and related trademarks and transferring them to the Purchaser. This consideration is expected to be received in installments through the first half of 2025. In addition, we have also recorded a receivable of approximately $160.2 million as of December 31, 2023 for post-closing adjustments related to the sale of the Business that is expected to be received during fiscal year 2024.
Previous report
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.
Previous report
Our pension plans have not experienced a material impact on liquidity or counterparty exposure due to the volatility and uncertainty in the credit markets. With respect to plans outside of the United States, we expect to contribute $6.9 million in the aggregate during fiscal year 2024. During fiscal years 2023 and 2022, we contributed $7.6 million and $6.6 million in the aggregate, respectively, to pension plans outside of the United States. During fiscal year 2023, we contributed $10.0 million to our defined benefit pension plan in the United States for the plan year 2022. We could potentially have to make additional funding payments in future periods for all pension plans. We expect to use existing cash and external sources to satisfy future contributions to our pension plans.
Previous report
Business combinations. Business combinations are accounted for at fair value. Acquisition costs are expensed as incurred and recorded in selling, general and administrative expenses; 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. Measurement period adjustments are made in the period in which the amounts are determined and the current period income effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. All changes that do not qualify as measurement period adjustments are also 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. For intangible assets, we normally utilize the“income method” which incorporates the forecast of all the expected future net cash flows attributable to the subject intangible asset, adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams. Depending on the asset valued, the key assumptions included one or more of the following: (1) future revenue growth rates, (2) future gross margin, (3) future selling, general and administrative expenses, (4) royalty rates, (5) customer attrition rates, and (6) discount rates. 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 fair value of contingent consideration is remeasured each period based on relevant information and changes to the fair value are included in the operating results for the period.
Previous report
We also recorded a receivable of approximately $160.2 million as of December 31, 2023 for post-closing adjustments related to the sale of the Business that is expected to be received during fiscal year 2024. The final amount of the receivable related to the post-closing adjustments is subject to change and could result in an adjustment to the gain when settled.
Previous report
In connection with the fiscal year 2024 impairment test performed as of January 1, 2024, the Tulip and Life Sciences reporting units, which had goodwill balances of $75.0 million and $4.4 billion, respectively, at December 31, 2023, had fair values that exceeded their carrying values by less than 20%. These reporting units are at increased risk of an impairment charge given the higher discount rates, competition and, to some extent, the macro-environment in which these reporting units operate. Despite the increased impairment risk associated with these reporting units, we do not believe there will be a significant change in the key estimates or assumptions driving the fair value of these reporting units that would lead to a material impairment charge.
Reworded paragraphs (30)
Previous wording
During fiscal year 2023, we delivered differentiated performance despite market headwinds, demonstrating the strength of our product portfolio, continued innovation, and investments in our people. Our overall revenue in fiscal year 2023 decreased by $561.3 million, or 17%, as compared to fiscal year 2022, reflecting a decrease of $560.7 million, or 28%, in Diagnostics segment revenue and a decrease of $0.6 million, or less than 1%, in Life Sciences segment revenue. The decrease in Diagnostics segment revenue was primarily driven by decreased demand for COVID-19 product offerings, partially offset by growth in the core immunodiagnostics business. The decrease in Life Sciences segment revenue was driven by a decrease in instruments revenue due to pharmaceutical and biotechnology market headwinds and a decrease in software revenue from the timing of contract renewals, partially offset by an increase in reagents revenue.
Current wording
During fiscal year 2024, we again delivered differentiated financial performance despite market headwinds, demonstrating the strength of our product portfolio and innovation. Our overall revenue in fiscal year 2024 increased by $4.5 million, or less than 1%, as compared to fiscal year 2023, reflecting an increase of $42.7 million, or 3%, in Diagnostics segment revenue and a decrease of $38.2 million, or 3%, in Life Sciences segment revenue. The increase in Diagnostics segment revenue was primarily driven by increased demand in our immunodiagnostics and reproductive health businesses, partially offset by a decrease in revenue from our applied genomics business. The decrease in Life Sciences segment revenue was driven by a decrease in instruments and reagents revenue due to pharmaceutical and biotechnology market headwinds, partially offset by an increase in software revenue from the timing of contract renewals and new orders.
Previous wording
Revenue for fiscal year 2023 was $2,750.6 million, as compared to $3,311.8 million for fiscal year 2022, a decrease of $561.3 million, or 17%. Theanalysis in the remainder of this paragraph compares segment revenue for fiscal year 2023 as compared to fiscal year 2022 and includes the effect of foreign exchange rate fluctuations. Diagnostics segment revenue for fiscal year 2023 was $1,459.1 million, as compared to $2,019.7 million for fiscal year 2022, a decrease of $560.7 million, or 28%, due to a decrease of $380.3 million in immunodiagnostics revenue, a decrease of $165.2 million in applied genomics revenue and a decrease of $15.3 million in reproductive health revenue. Life Sciences segment revenue was $1,292.3 million for fiscal year 2023, as compared to $1,292.9 million for fiscal year 2022, a decrease of $0.6 million, or less than 1%, driven by a decrease of $24.3 million in instruments revenue and a decrease of $17.7 million in software revenue, partially offset by an increase of $41.4 million in reagents revenue.
Current wording
Revenue for fiscal year 2024 was $2,755.0 million, as compared to $2,750.6 million for fiscal year 2023, an increase of $4.5 million, or less than 1%. Theanalysis in the remainder of this paragraph compares segment revenue for fiscal year 2024 as compared to fiscal year 2023 and includes the effect of foreign exchange rate fluctuations. Life Sciences segment revenue was $1,254.1 million for fiscal year 2024, as compared to $1,292.3 million for fiscal year 2023, a decrease of $38.2 million, or 3%, driven by a decrease of $47.2 million in instruments revenue and a decrease of $13.5 million in reagents revenue, partially offset by an increase of $22.5 million in software revenue. Diagnostics segment revenue for fiscal year 2024 was $1,500.9 million, as compared to $1,458.2 million for fiscal year 2023, an increase of $42.7 million, or 3%, due to an increase of $43.7 million in immunodiagnostics revenue and an increase of $22.6 million in reproductive health revenue, partially offset by a decrease of $23.7 million in applied genomics revenue. As a result of adjustments to deferred revenue related to certain acquisitions required by business combination accounting rules, we did not recognize $0.8 million of revenue for each of thefiscal years 2024 and 2023 that otherwise would have been recorded by the acquired businesses during each of the respective periods.
Previous wording
2023 from 40% in fiscal year 2022, resulting in a decrease in gross margin of approximately 411 basis points to 56% in fiscal year 2023 from 60% in fiscal year 2022 due to lower COVID-19 revenue and an unfavorable shift in product mix, partially offset by pricing actions. The amortization of purchase accounting adjustments to record the inventory from certain acquisitions added an incremental expense of $45.3 million for fiscal year 2022. Stock compensation expense related to awards given to BioLegend employees post-acquisition added an incremental expense of $2.8 million for fiscal year 2023, as compared to $5.6 million for fiscal year 2022. The above decreases were partially offset by anincrease inamortization of intangible assets which was $147.6 million for fiscal year 2023, as compared to $141.6 million for fiscal year 2022.
Current wording
Cost of revenue for fiscal year 2024 was $1,217.4 million, as compared to $1,210.9 million for fiscal year 2023, an increase of approximately $6.5 million, or 1%. As a percentage of revenue, cost of revenue increased to 44.2% in fiscal year 2024 from 44.0% in fiscal year 2023, resulting in a decrease in gross margin of approximately 16 basis points to 55.8% in fiscal year 2024 from 56.0% in fiscal year 2023 due to an unfavorable shift in product mix and higher product costs, partially offset by pricing actions and productivity initiatives. Rebranding costs were $6.2 million for fiscal year 2024. Stock compensation expense related to awards given to BioLegend employees post-acquisition added an incremental expense of $0.6 million for fiscal year 2024, as compared to $2.8 million for fiscal year 2023. Amortization of intangible assets was $144.4 million for fiscal year 2024, as compared to $147.6 million for fiscal year 2023.
Previous wording
Selling, general and administrative expenses for fiscal year 2023 were $1,022.6 million, as compared to $1,025.5 million for fiscal year 2022, a decrease of approximately $3.0 million, or 0.3%. As a percentage of revenue, selling, general and administrative expenses increased to 37% in fiscal year 2023 from 31% in fiscal year 2022. Amortization of intangible assets decreased and was $217.5 million for fiscal year 2023, as compared to $229.1 million for fiscal year 2022. Purchase accounting adjustments added an incremental expense of $4.3 million for fiscal year 2023, which primarily consisted of a change in contingent consideration, as compared to decreasing expenses by $1.2 million for fiscal year 2022. Legal costs for significant litigation matters and settlements, net of reversals, were minimal for fiscal year 2023, as compared to decreasing expenses by $0.6 million for fiscal year 2022. Acquisition and divestiture-related expenses, which primarily consisted of rebranding, legal and integration costs and stock compensation expense related to the awards given to BioLegend employees post-acquisition, added an incremental expense of $62.0 million for fiscal year 2023, as compared to $28.9 million for fiscal year 2022. Costs for significant environmental matters also added an incremental expense of $2.5 million for fiscal year 2023. Restructuring and other, net, increased and was $26.6 million for fiscal year 2023, as compared to $13.6 million for fiscal year 2022. Excluding the factors above, the net decrease in selling, general and administrative expenses was the result of cost containment and productivity initiatives.
Current wording
Selling, general and administrative expenses for fiscal year 2024 were $994.1 million, as compared to $1,022.6 million for fiscal year 2023, a decrease of $28.5 million, or 3%. As a percentage of revenue, selling, general and administrative expenses decreased to 36.1% in fiscal year 2024 from 37.2% in fiscal year 2023. Amortization of intangible assets decreased and was $215.0 million for fiscal year 2024, as compared to $217.5 million for fiscal year 2023. Restructuring and other costs, net, decreased and were $17.5 million for fiscal year 2024, as compared to $26.6 million for fiscal year 2023. Acquisition and divestiture-related expenses, which primarily consisted of legal and integration costs, and stock compensation expense related to the awards given to BioLegend employees post-acquisition, added an incremental expense of $16.3 million for fiscal year 2024, as compared to $62.0 million for fiscal year 2023. Purchase accounting adjustments decreased expenses by $1.7 million for fiscal year 2024, which primarily consisted of a change in fair value of contingent consideration, as compared to increasing expenses by $4.3 million for fiscal year 2023. Costs for significant environmental matters also added an incremental expense of $2.5 million for fiscal year 2023. The above decreases were partially offset by an increase in asset impairments, which added an incremental expense of $22.8 million for fiscal year 2024. Significant litigation matters and settlements added an incremental expense of $7.8 million for fiscal year 2024 and were minimal for fiscal year 2023. Excluding the factors above, the net decrease in selling, general and administrative expenses was the result of productivity initiatives and cost containment.
Previous wording
Research and development expenses for fiscal year 2023 were $216.6 million, as compared to $221.6 million for fiscal year 2022, a decrease of $5.0 million, or 2%. As a percentage of revenue, research and development expenses increased to 8% in fiscal year 2023 from 7% in fiscal year 2022. The decrease in research and development expenses was primarily driven by a cost containment and productivity initiatives, as well as a decrease in stock compensation expense related to awards given to BioLegend employees post-acquisition, which was an expense of $4.3 million in fiscal year 2023, as compared to $5.4 million for fiscal year 2022. The decreased expenses were partially offset by our investments in new product development.
Current wording
Research and development expenses for fiscal year 2024 were $196.8 million, as compared to $216.6 million for fiscal year 2023, a decrease of $19.7 million, or 9%. As a percentage of revenue, research and development expenses decreased to 7.1% in fiscal year 2024 from 7.9% in fiscal year 2023. The decrease in research and development expenses was primarily driven by productivity initiatives and cost containment, as well as a decrease in stock compensation expense related to awards given to BioLegend employees post-acquisition, which added an incremental expense of $2.2 million in fiscal year 2024, as compared to $4.3 million for fiscal year 2023.
Previous wording
The increase of $26.7 million in interest and other expense, net, in fiscal year 2023 as compared to fiscal year 2022 was primarily due to an increase in other components of net periodic pension cost of $52.2 million, an increase in foreign exchange losses and other expense, net of $30.1 million and an increase in the change in fair value of financial securities of $18.2 million. Other components of net periodic pension cost increased due to the decreases in the applicable discount rates. Foreign exchange losses and other expense, net, increased primarily due to a foreign exchange loss of $24.0 million for the fiscal year 2023 related to the cash proceeds from the sale of the Business that were held offshore. These increases in interest and other expense, net, were partially offset by an increase in interest income of $68.5 million and a decrease of $5.1 million in interest expense. Interest income increased due to an increase in investments and higher interest rates. Interest expense decreased due to $3.7 million of debt extinguishment income for the fiscal year 2023, as compared to $2.9 million of debt extinguishment income for the fiscal year 2022, as well as a result of an overall decrease in debt. A more complete discussion of our liquidity is set forth below under the heading “Liquidity and Capital Resources.”
Current wording
Interest income increased due to an increase in short-term investments and higher interest rates. Interest expense decreased primarilydue to lower debt balance as a result of the repayment of senior unsecured notes that matured in September 2023 and September 2024. Change in fair value of investments resulted in income of $8.0 million in fiscal year 2024 as compared to expense of $33.9 million in fiscal year 2023 primarily due to the fluctuation in share price of investments in marketable securities, partially offset by fair value changes in notes receivables and other investments. Other components of net periodic pension cost decreased primarily due to increases in applicable discount rates. Foreign exchange losses and other expense, net, was lower during fiscal year 2024 as compared to the same period in the prior year primarily due to a foreign exchange loss of $24.0 million that was recognized in fiscal year 2023 related to the cash proceeds from the sale of the Business that were held offs hore. A more complete discussion of our liquidity is set forth below under the heading “Liquidity and Capital Resources.”
Previous wording
The effective tax rates on continuing operations were 1.9% and 21.3% for fiscal years 2023 and 2022, respectively. The lower than expected 2023 tax rate will not repeat in 2024. A reconciliation of income tax expense at the U.S. federal statutory income tax rate to the recorded tax provision is as follows for the fiscal years ended:
Current wording
The effective tax rates were 10.5% and 1.9% for fiscal years 2024 and 2023, respectively. A reconciliation of income tax expense at the U.S. federal statutory income tax rate to the recorded tax provision is as follows for the fiscal years ended:
Previous wording
Revenue for fiscal year 2023 was $1,292.3 million, as compared to $1,292.9 million for fiscal year 2022, a decrease of $0.6 million, or less than 1%. Thedecrease in our Life Sciences segment revenue was driven by a decrease of $24.3 million in instruments revenue and a decrease of $17.7 million in software revenue, partially offset by an increase of $41.4 million in reagents revenue.
Current wording
Revenue for fiscal year 2024 was $1,254.1 million, as compared to $1,292.3 million for fiscal year 2023, a decrease of $38.2 million, or 3%. The decrease in our Life Sciences segment revenue was driven by a decrease of $47.2 million in instruments revenue and a decrease of $13.5 million in reagents revenue, partially offset by an increase of $22.5 million in software revenue.
Previous wording
Segment operating income for fiscal year 2023 was $489.3 million, as compared to $503.2 million for fiscal year 2022, a decrease of $13.9 million, or 3%. Segment operating margin decreased 100 basis points in fiscal year 2023, as compared to fiscal year 2022, primarily due to an unfavorable shift in product mix, partially offset by pricing actions.
Current wording
Segment operating income for fiscal year 2024 was $448.0 million, as compared to $489.3 million for fiscal year 2023, a decrease of $41.3 million, or 8%. Segment operating margin decreased 214 basis points in fiscal year 2024, as compared to fiscal year 2023, primarily due to lower volume and continued investments in new product development, digital capabilities and growth initiatives, partially offset by pricing actions and productivity initiatives.
Previous wording
Revenue for fiscal year 2023 was $1,459.1 million, as compared to $2,019.7 million for fiscal year 2022, a decrease of $560.7 million, or 28%, which includes an approximate 1% decrease in revenue attributable to favorable changes in foreign exchange rates. Thedecrease in our Diagnostics segment revenue during fiscal year 2023 was due to a decrease of $380.3 million in immunodiagnostics revenue, a decrease of $165.2 million in applied genomics revenue and a decrease of $15.3 million in reproductive health revenue.
Current wording
Revenue for fiscal year 2024 was $1,500.9 million, as compared to $1,458.2 million for fiscal year 2023, an increase of $42.7 million, or 3%, which includes an approximate 1% decrease in revenue attributable to unfavorable changes in foreign exchange rates. Theincrease in our Diagnostics segment revenue during fiscal year 2024 was due to an increase of $43.7 million in immunodiagnostics revenue and an increase of $22.6 million in reproductive health revenue, partially offset by a decrease of $23.7 million in applied genomics revenue.
Previous wording
On March 13, 2023, we completed the previously announced sale (the “Closing”) of certain assets and the equity interests of certain entities constituting our Applied, Food and Enterprise Services businesses (the “Business”) to PerkinElmer Topco, L.P. (formerly known as Polaris Purchaser, L.P.) (the “Purchaser”), a Delaware limited partnership owned by funds managed by affiliates of New Mountain Capital L.L.C. (the “Sponsor”), for an aggregate purchase price of up to$2.45 billion. We received approximately$2.13 billion in cash proceeds, before transaction costs and subject to post-closing adjustments. We are entitled to an additional$75.0 million in proceeds as consideration for our ceasing theuse of the PerkinElmer brand and related trademarks and transferring them to the Purchaser. This consideration is expected to be received in installments through the first half of 2025. The discounted value of the $75.0 million was measured as $65.2 million and was included in the proceeds. In addition, we are entitled to additional consideration of up to $150.0 million that is contingent on the exit valuation the Sponsor and its affiliated funds receive on a sale or other capital events related to the Business. The fair value of this element of consideration was determined to be$15.9 million and was included in the proceeds at Closing. We also recorded a receivable of approximately $160.2 million as of December 31, 2023 for post-closing adjustments that are expected to be settled with the Purchaser during fiscal year 2024. The final amount of the receivable related to the post-closing adjustments is subject to change.
Current wording
On March 13, 2023, we completed the sale (the “Closing”) of certain assets and the equity interests of certain entities constituting our Applied, Food and Enterprise Services businesses (the “Business”) to PerkinElmer Topco, L.P. (formerly known as Polaris Purchaser, L.P.) (the “Purchaser”), a Delaware limited partnership owned by funds managed by affiliates of New Mountain Capital L.L.C. (the “Sponsor”), for an aggregate purchase price of up to$2.45 billion. We received approximately$2.27 billion in cash proceeds before transaction costs. At the Closing, we were entitled to an additional$75.0 million in proceeds payable in installments to commence upon our ceasing the use of the PerkinElmer brand and related trademarks and transferring them to the Purchaser (the “Brand Fee”). The discounted value of the $75.0 million was measured as $65.2 million and was included in the proceeds at Closing. During the fiscal year 2024, we received $18.8 million of the Brand Fee. We expect to receive the remaining balance of the Brand Fee in installments in 2025. In addition, we are entitled to additional consideration of up to $150.0 million that is contingent on the exit valuation the Sponsor and its affiliated funds receive on a sale or other capital events related to the Business. The fair value of this element of consideration was determined to be$15.9 million and was included in the proceeds at Closing. During fiscal year 2024, we received approximately $138.5 million of cash from the Purchaser and recognized a loss of $19.8 million primarily related to post-closing adjustments.
Previous wording
The results of discontinued operations during fiscal year 2023 include the results of the Business through March 13, 2023. During fiscal year 2023, we recognized an increase in provision for income taxes of $242.8 million, primarily related to the taxes on the gain on sale of the Business. During fiscal year 2023, we recognized divestiture-related costs in gain on sale of $37.1 million. During fiscal year 2023, we recognized $36.0 million of divestiture-related costs in selling, general and administrative expenses in discontinued operations, as compared to $69.4 million during fiscal year 2022.
Current wording
The results of discontinued operations during fiscal year 2023 include the results of the Business through March 13, 2023. During fiscal year 2024, we recognized $25.4 million of other expense primarily due to the adjustment to the receivable related to the post-closing adjustment and divestiture-related costs in gain on sale. During fiscal year 2023 we recognized $37.1 million of divestiture-related costs incurred after the Closing in gain on sale and $36.0 million of divestiture-related costs incurred prior to Closing in selling, general and administrative expenses in discontinued operations.
Previous wording
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 cash flows from our operations, borrowing capacity available under our senior unsecured credit facility and access to 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, such as contributions to our postretirement benefit plans. The sale of the Business generated approximately$2.13 billion in cash proceeds. We have used and expect to continue to use these proceeds for a combination of satisfying upcoming debt maturities, opportunistic share repurchases and continued strategic and value creating acquisitions.
Current wording
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 our internal operations, borrowing capacity available under our senior unsecured revolving credit facility and access to debt markets. We anticipate that our internal operations will generate sufficient cash to fund our operating expenses, capital expenditures, acquisitions, interest payments on our debt and dividends on our common stock, for the foreseeable future, including at least the next 12 months. The sale of the Business generated approximately$2.27 billion in cash proceeds. We expect to continue to use these proceeds for a combination of debt retirement, opportunistic share repurchases and continued strategic and value creating acquisitions.
Previous wording
Operating Activities. Net cash provided by continuing operations was $279.4 million for fiscal year 2023, as compared to $672.5 million for fiscal year 2022, a decrease of $393.1 million, primarily due to lower profitability from a decreased demand in COVID-19 product offerings and more cash used in working capital during fiscal year 2023 as compared to fiscal year 2022. The cash provided by operating activities for fiscal year 2023 was principally a result of income from continuing operations of $179.5 million, adjustments for non-cash charges aggregating to $491.2 million, including depreciation and amortization of $431.8 million, and a net cash decrease in working capital of $391.3 million, primarily due to trailing divestiture-related liabilities with expected recovery from the post-closing adjustments related to the sale of the Business. During fiscal year 2023, we contributed $10.0 million to our pension plan in the United States and $7.6 million, in the aggregate, to pension plans outside of the United States.
Current wording
Operating Activities. Net cash provided by continuing operations was $665.0 million for fiscal year 2024, as compared to $279.4 million for fiscal year 2023, an increase of $385.6 million, primarily due to higher income from continuing operations and less cash used to fund working capital during fiscal year 2024 as compared to fiscal year 2023. The cash provided by operating activities for fiscal year 2024 was principally a result of income from continuing operations of $283.1 million, adjustments for non-cash charges aggregating to $400.2 million, including depreciation and amortization of $427.8 million, and a net cash decrease in working capital of $18.3 million. The cash provided by operating activities for fiscal year 2023 was principally a result of income from continuing operations of $179.5 million, adjustments for non-cash charges aggregating to $491.2 million, including depreciation and amortization of $431.8 million, and a net cash decrease in working capital of $391.3 million. Contingent consideration payments of $6.1 million during fiscal year 2024 as compared to $0.6 million during fiscal year 2023 were included in cash flows from operating activities.
Previous wording
Investing Activities. Net cash used in the investing activities of our continuing operations was $761.2 million for fiscal year 2023, as compared to $116.9 million for fiscal year 2022, an increase of $644.3 million. During fiscal year 2023, we made purchases of investments in U.S. treasury securities totaling $1,221.6 million. For fiscal year 2023, the net cash used for capital expenditures and acquisitions were $81.4 million and $2.1 million, respectively, as compared to $85.6 million and $7.5 million, respectively, for fiscal year 2022. The capital expenditures in each period were primarily for manufacturing, software, and other capital equipment purchases. During fiscal year 2023, purchases of investments were $6.3 million, as compared to $47.2 million for fiscal year 2022. The cash used in investing activities during fiscal year 2023 was partially offset by proceeds from maturity of U.S. treasury securities totaling $550.0 million, and proceeds from disposition of businesses and assets totaling $0.2 million. The cash used in investing activities during fiscal year 2022 was partially offset by proceeds from notes receivable totaling $8.9 million, and proceeds from disposition of businesses and assets totaling $14.5 million.
Current wording
Investing Activities. Net cash provided by the investing activities of our continuing operations was $619.3 million for fiscal year 2024, as compared to a $761.2 million net cash usage for fiscal year 2023, an increase of $1,380.5 million. During fiscal year 2024, proceeds from maturity of U.S. treasury securities were $710.0 millionand proceeds from investments and notes receivables were $2.5 million. The cash provided by investing activities during fiscal year 2024 was partially offset by net cash used for capital expenditures of $86.6 million, as compared to $81.4 million for fiscal year 2023. During fiscal year 2024, purchases of investments and notes receivables were$6.6 million, as compared to$6.3 million for fiscal year 2023. During fiscal year 2023, purchases of investments in U.S. treasury securities amounted to $1.2 billion, and net cash used for acquisitions was $2.1 million, which were partially offset by proceeds from maturity of U.S. treasury securities totaling $550.0 million.
Previous wording
Financing Activities. Net cash used in the financing activities of our continuing operations was $947.1 million for fiscal year 2023, as compared to $661.8 million for fiscal year 2022, an increase of $285.3 million. During fiscal year 2023, we made net payments of $517.5 million on debts, as compared to $559.2 million during fiscal year 2022. The changes in both periods reflect our intentions to pay down debt, which we expect to continue throughout fiscal year 2024. During fiscal year 2023, we repurchased shares of our common stock for a total cost of $388.9 million, as compared to $80.6 million in fiscal year 2022. We paid $35.0 million in dividends for fiscal year 2023, as compared to $35.3 million in fiscal year 2022. We paid $10.1 million for acquisition-related contingent consideration during fiscal year 2023. We paid $0.8 million in settlement of hedges in fiscal year 2022. The cash used in financing activities during fiscal year 2023 was partially offset by proceeds from the issuance of common stock under our stock plans of $4.3 million during fiscal year 2023, as compared to $14.1 million in fiscal year 2022.
Current wording
Financing Activities. Net cash used in financing activities was $1,128.2 million for fiscal year 2024, as compared to $947.1 million for fiscal year 2023, an increase of $181.1 million. During fiscal year 2024, we made net payments of $723.1 million on debts, as compared to $517.5 million during fiscal year 2023. During fiscal year 2024, we repurchased shares of our common stock for a total cost of $369.6 million, as compared to $388.9 million in fiscal year 2023. We paid $34.5 million in dividends for fiscal year 2024, as compared to $35.0 million in fiscal year 2023. We paid $8.8 million for acquisition-related contingent consideration during fiscal year 2024, as compared to $10.1 million in the prior year period. The cash used in financing activities during fiscal year 2024 was partially offset by proceeds from the issuance of common stock under our stock plans of $7.7 million during fiscal year 2024, as compared to $4.3 million in fiscal year 2023.
Previous wording
During fiscal year 2023, we paid in full$467.1 million of outstanding 0.550% senior unsecured notes that became due in September 2023. Since the beginning of the third quarter of fiscal year 2022, we have repurchased $88.5 million in aggregate principal amount of our 2024 Notes. At December 31, 2023, we had investments in U.S. treasury securities with a carrying amount of $689.9 million whose proceeds upon maturity are intended to be utilized to repay the outstanding 2024 Notes. See Note 13, Debt, in the Notes to Consolidated Financial Statements for a detailed discussion of our borrowing arrangements.
Current wording
During fiscal year 2024, we paid in full$711.5 million of outstanding 0.850% Senior Unsecured Notes that became due in September 2024 (the“2024 Notes”). During fiscal year 2024, we received proceeds of $710.0 million upon the maturity of all our outstanding U.S. Treasury securities and utilized those proceeds to partially repay the outstanding 2024 Notes. In addition, on January 7, 2025, our prior senior unsecured revolving credit facility was cancelled and replaced with a new senior unsecured revolving credit facility with a five-year term and a borrowing capacity of$1.5 billion available through January 7, 2030. See Note 12, Debt, in the Notes to Consolidated Financial Statements for a detailed discussion of our borrowing arrangements.
Previous wording
We use a variety of cash redeployment and financing strategies to ensure that our worldwide cash is available in the locations in which it is needed. During the fiscal year ended December 31, 2023, we repatriated approximately$1.6 billion of foreign cash to the United States.
Current wording
At December 29, 2024, we had cash and cash equivalents of $1,163.4 million, of which $562.6 million was held by our non-U.S. subsidiaries, and we had $1.5 billion of borrowing capacity available under our senior unsecured revolving credit facility. We use a variety of cash redeployment and financing strategies to ensure that our worldwide cash is available in the locations in which it is needed. We recorded the applicable taxes associated with the future remittance of undistributed foreign earnings previously taxed at the U.S. federal level and/or that would be claimed for a dividend received deduction if repatriated.
Previous wording
On July 22, 2022, our Board authorized us to repurchase shares of common stock for an aggregate amount up to $300.0 million under a stock repurchase program (the “Repurchase Program”). On April 27, 2023, the Repurchase Program was terminated by the Board and the Board authorized us to repurchase shares of common stock for an aggregate amount up to $600.0 million under a new stock repurchase program (the “New Repurchase Program”). The New Repurchase Program will expire on April 26, 2025, unless terminated earlier by the Board and may be suspended or discontinued at any time. During fiscal year 2023, we repurchased 1,004,544 shares of common stock under the Repurchase Program for an aggregate cost of $131.3 million. During fiscal year 2023, werepurchased 2,159,985 shares of common stock under the New Repurchase Program for an aggregate cost of$244.6 million. As of December 31, 2023, $355.4 million remained available for aggregate repurchases of shares under the New Repurchase Program. 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.
Current wording
On April 27, 2023, our Board authorized us to repurchase shares of common stock for an aggregate amount up to $600.0 million under a stock repurchase program (the “Repurchase Program”). On October 24, 2024, the Repurchase Program was terminated by our Board and our Board authorized us to repurchase shares of common stock for an aggregate amount up to $1.0 billion under a new stock repurchase program (the “New Repurchase Program”). No shares remain available for repurchase under the Repurchase Program due to its termination. The New Repurchase Program will expire on October 23, 2026, unless terminated earlier by our Board and may be suspended or discontinued at any time. During fiscal year 2024, we repurchased 1,820,296 shares of common stock under the Repurchase Program for an aggregate cost of $213.6 million. During fiscal year 2024, we repurchased 1,238,755 shares of common stock under the New Repurchase Program for an aggregate cost of $142.8 million. As of December 29, 2024, $857.2 million remained available for aggregate repurchases of shares under the New Repurchase Program. If we continue to repurchase shares, the New Repurchase Program will be funded using our existing financial resources, including cash and cash equivalents, and our existing senior unsecured revolving credit facility.
Previous wording
As of December 31, 2023, we may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $98.0 million. As of December 31, 2023, we have recorded contingent consideration obligations of $40.0 million, of which $11.0 million was recorded in accrued expenses and other current liabilities, and $29.0 million was recorded in long-term liabilities. The expected maximum earnout period for acquisitions with open contingency periods is 7.9 years from December 31, 2023, and the remaining weighted average expected earnout period at December 31, 2023 was 5.0 years.
Current wording
As of December 29, 2024, we may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $75.9 million. As of December 29, 2024, we have recorded contingent consideration obligations of $21.8 million, of which $4.3 million was recorded in accrued expenses and other current liabilities, and $17.4 million was recorded in long-term liabilities. The maximum earnout period for acquisitions with open contingency periods is 6.9 years from December 29, 2024, and the remaining weighted average expected earnout period at December 29, 2024 was 4.3 years.
Previous wording
We and our subsidiaries and affiliates may from time to time, in our sole discretion, purchase, repay, redeem or retire any of our outstanding debt securities (including any publicly issued debt securities), in privately negotiated or open market transactions, by tender offer or otherwise, or extend or refinance any of our outstanding indebtedness. Additionally, we purchased U.S. treasury securities whose proceeds upon maturity are intended to be utilized to repay outstanding debt securities, including our 0.850% senior unsecured notes due in September 2024 (the “2024 Notes”), which had $711.5 million in outstanding principal as of December 31, 2023.
Current wording
We and our subsidiaries may from time to time, in our sole discretion, purchase, repay, redeem or retire any of our outstanding debt securities (including any publicly issued debt securities), in privately negotiated or open market transactions, by tender offer or otherwise, or extend or refinance any of our outstanding indebtedness.
Previous wording
•changes in our working capital requirements.
Current wording
•changes in our working capital requirements and capital expenditures.
Previous wording
See Note 1, Nature of Operations and Accounting Policies, in the Notes to Consolidated Financial Statements for a summary of recently issued accounting pronouncements. We did not adopt any new accounting pronouncements during fiscal year 2023. We are in the process of determining the impact of the recently issued accounting pronouncements that have not yet been adopted in our consolidated financial statements.
Current wording
See Note 1, Nature of Operations and Accounting Policies, in the Notes to Consolidated Financial Statements for a summary of recently issued accounting pronouncements. We adopted Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) during fiscal year 2024 andhave included the additional disclosures related to the reportable segments in Note 21, Industry Segment and Geographic Area Information, in the Notes to Consolidated Financial Statements. We are in the process of determining the impact of the recently issued accounting pronouncements that have not yet been adopted in our consolidated financial statements.
Previous wording
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 accounting for business combinations, long-lived assets, including goodwill and other intangibles and employee compensation and benefits. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Current wording
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. 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.
Previous wording
Divestitures: As part of our continuing efforts to focus on higher growth opportunities, we have discontinued certain businesses. In accounting for such transactions, we apply the applicable accounting guidance under U.S. GAAP pertaining to discontinued operations and disposals of components of an entity. When the discontinued operations represented a strategic shift that will have a major effect on our operations and financial statements, we accounted for these businesses as discontinued operations. We recognize divestiture-related costs that are not part of divestiture consideration as general and administrative expense as they are incurred. These costs typically include transaction and disposal costs, such as legal, accounting, and other professional fees. The accounting for divestiture requires estimates and judgment as to the determination of the gain or loss on sale and the fair value of the different elements of consideration received. We received cash proceeds of$2.13 billion and we are entitled to two elements of additional consideration that become payable upon the resolution of certain events. First, we are entitled to proceeds of$75.0 million as consideration for our ceasing the use of the PerkinElmer brand and related trademarks and transferring them to the Purchaser (“Brand Sale”). This consideration is expected to be received in installments through the first half of 2025. We are also entitled to proceeds of up to$150.0 million that is contingent on the proceeds that the Purchaser and its affiliates receive on a subsequent sale or other capital event related to the Business (“Contingent Gain”).
Current wording
Divestitures: As part of our continuing efforts to focus on higher growth opportunities, we have disposed of or sold certain businesses. In accounting for such transactions, we apply the applicable accounting guidance under U.S. GAAP pertaining to discontinued operations and disposals of components of an entity. When the discontinued operations represented a strategic shift that will have a major effect on our operations and financial statements, we accounted for these businesses as discontinued operations. We recognize divestiture-related costs that are not part of divestiture consideration as general and administrative expense as they are incurred. These costs typically include transaction and disposal costs, such as legal, accounting, and other professional fees. The accounting for divestiture requires estimates and judgment as to the determination of the gain or loss on sale and the fair value of the different elements of consideration received. We received cash proceeds of$2.27 billion and we are entitled to two elements of additional consideration that become payable upon the resolution of certain events. First, we are entitled to proceeds of $75.0 million as consideration for our ceasing the use of the PerkinElmer brand and related trademarks and transferring them to the Purchaser (“Brand Sale”). During the fiscal year 2024, we received $18.8 million of the Brand Fee. The remaining consideration is expected to be received in installments through fiscal year 2025. We are also entitled to proceeds of up to $150.0 million that is contingent on the proceeds that the Purchaser and its affiliates receive on a subsequent sale or other capital event related to the Business (“Contingent Gain”).
Previous wording
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, operating lease right of use assets, investments, identifiable intangible assets, and goodwill. We periodically review the carrying value of all of these assets based, in part, upon current estimates of fair values and our projections of anticipated future cash flows. We undertake this review (i) on an annual basis for assets such as goodwill, 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.
Current wording
Goodwill: We periodically review the carrying value of our goodwill, based, in part, upon current estimates of fair values and our projections of anticipated future cash flows. We undertake this review (i) on an annual basis, and (ii) on a periodic basis when facts and circumstances indicate that goodwill may not be recoverable. Any impairment charge that we record reduces our earnings.
Previous wording
For goodwill, the test consists of the comparison of the fair value to the carrying value of the reporting unit to determine if the carrying value exceeds the fair value. If the carrying value of the reporting unit exceeds its fair value, an impairment loss in an amount equal to that excess is recognized up to the amount of goodwill. 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. We completed the annual goodwill impairment test using a measurement date of January 2, 2023, and concluded that there was no goodwill impairment. We consistently employ the income approach to estimate the current fair value when testing for impairment of goodwill. A number of significant assumptions and estimates are involved in the application of the income approach to forecast operating cash flows, including markets and market share, sales volumes and prices, costs to produce, tax rates, capital spending, discount rates and working capital changes. Cash flow forecasts are based on approved business unit operating plans for the early years’ cash flows and historical relationships in later years. The income approach is sensitive to changes in long-term terminal growth rates and the discount rates. The long-term terminal growth rates are consistent with our historical long-term terminal growth rates, as the current short-term economic trends are not expected to affect our long-term terminal growth rates. We corroborate the income approach with a market approach. 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. At January 2, 2023, the fair value exceeded the carrying value by more than 20.0% for each reporting unit, except for the Tulip and EUROIMMUN reporting units, which had fair values that exceeded their carrying values by less than 20%. The range of the long-term terminal growth rates for the reporting units was 2.0% to 6.0% for the fiscal year 2023 impairment analysis. The range for the discount rates for the reporting units was 8.5% to 14.5%. Keeping all other variables constant, a 10.0% change in any one of these input assumptions for the various reporting units, except for our Tulip and EUROIMMUN reporting units, would still allow us to conclude that there was no impairment of goodwill. At December 31, 2023, the operating performance of EUROIMMUN reporting unit exceeded the original forecast and the forecast for this reporting unit no longer indicates any sensitivity that would lead to a material impairment charge.
Current wording
The goodwill impairment test consists of the comparison of the fair value to the carrying value of the reporting unit to determine if the carrying value exceeds the fair value. If the carrying value of the reporting unit exceeds its fair value, an impairment loss in an amount equal to that excess is recognized up to the amount of goodwill. During the fourth quarter of fiscal year 2024, we voluntarily changedour annual goodwill impairment testing date from the later of January 1 or the first day of each fiscal year to the later of November 1 or the first day of our eleventh fiscal month of each fiscal year. We changed the measurement date to more closely align the annual impairment testing date with the most current information from the budgeting and strategic planning process. We believe the change in goodwill impairment testing date does not represent a material change to our method of applying the accounting principle in light of our internal controls and requirements to assess goodwill impairment upon certain triggering events. This change was applied prospectively and therefore, we performed our annual impairment testing for our reporting units for fiscal year 2024 as of January 1, 2024 and November 1, 2024. We have identified six reporting units and consistently employ the income approach to estimate the current fair value when testing for impairment of goodwill. We corroborate the income approach with a market approach.
Previous wording
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 the calendar month-end that is closest to our fiscal year end and accordingly will be recorded in the fourth quarter, unless we are required to perform an interim remeasurement.
Current wording
Post-retirement benefits: We sponsor both funded and unfunded U.S. and non-U.S. defined benefit pension plans and other post-retirement benefits. Retirement and post-retirement 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 post-retirement 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 the calendar month-end that is closest to our fiscal year end and accordingly will be recorded in the fourth quarter, unless we are required to perform an interim remeasurement.
Previous wording
We recognized a loss of $20.2 million in fiscal year 2023 and a gain of $28.3 million in fiscal year 2022, for our retirement and postretirement benefit plans, which include the charge or benefit for the mark-to-market adjustment for the benefit plans, which were recorded in the fourth quarter of each fiscal year. The loss or income related to the mark-to-market adjustment on benefit plans was a pre-tax loss of $5.7 million in fiscal year 2023 and a pre-tax gain of $28.9 million fiscal year 2022. We expect a loss of approximately $10.0 million in fiscal year 2024 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 2024. Mark-to-market adjustments are primarily driven by events and circumstances beyond our control, including changes in interest rates, the performance of the financial markets and mortality assumptions. 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 2024. 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 2024. 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, the discount rate applied and mortality assumptions, to determine service cost and interest cost, in order to arrive at expected pension income or expense for the year. We use discount rates for each individual plan based upon the expected cash flows using the applicable spot rates derived from a yield curve over the projected cash flow period.
Current wording
We recognized total costs of $9.3 million in fiscal year 2024 and $20.2 million in fiscal year 2023, for our retirement and post-retirement benefit plans, which include the charge for the mark-to-market adjustment for the benefit plans. The loss related to the mark-to-market adjustment on benefit plans was$1.0 million in fiscal year 2024 and $9.9 million in fiscal year 2023. It is difficult to reliably calculate and predict whether there will be a mark-to-market adjustment in fiscal year 2025. Mark-to-market adjustments are often driven by events and circumstances beyond our control, but primarily relate to changes in interest rates and actual return on investments on plan assets. To the extent the discount rates decrease or the value of our plan assets decrease, mark-to market losses will be recognized. Conversely, to the extent the discount rates increase or the value of our plan assets increase more than expected, mark-to market gains will be recognized.
Previous wording
If any of our assumptions were to change as of December 31, 2023, our pension plan expenses would also change as follows:
Current wording
If the discount rate used to measure the pension obligations were to change as of December 29, 2024, our pension plan expenses would also change as follows:
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
A number of significant estimates are involved in the application of the income approach to arrive at forecasted cash flows. Cash flow forecasts are based on approved business unit operating plans for the early years’ cash flows and on our long-range plan in later years. The income approach is sensitive to changes in revenue growth rates and the discount rates.