What changed in this filing

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Item 1. Financial Statements

2021-02-02 compared with 2020-11-04 · 155 added, 117 removed, 509 unchanged (35% of the section changed)

3 unchanged sentences

(Unaudited in thousands, except per share data)

Three Months Ended Six Months Ended

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Three Months Ended Nine Months Ended

2020 December 28,

2019 December 26,

2020 December 28,

Net revenues $ 240,371 $ 258,970 $ 645,434 $ 749,987

10 unchanged sentences

Income before provision for income taxes 37,374 37,829 100,310 65,192

Provision (benefit) for income taxes 6,855 7,602 4,308 ( 1,644 )

Provision for income taxes 5,492 7,934 9,800 6,290

Net income $ 31,882 $ 29,895 $ 90,510 $ 58,902

9 unchanged sentences

(Unaudited in thousands, except share data)

September 26,

2020 March 28,

1 unchanged sentence

Cash and cash equivalents $ 189,002 $ 137,311

Accounts receivable, less allowance of $2,699 at September 26, 2020 and $3,824 at March 28, 2020 141,533 165,207

Accounts receivable, less allowance of $2,525 at December 26, 2020 and $3,824 at March 28, 2020 146,939 165,207

Inventories, net 299,710 270,276

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Property, plant and equipment, net 240,009 253,399

Intangible assets, less accumulated amortization of $299,450 at September 26, 2020 and $296,942 at March 28, 2020 127,210 133,106

Intangible assets, less accumulated amortization of $309,951 at December 26, 2020 and $296,942 at March 28, 2020 119,716 133,106

Goodwill 215,508 210,652

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Authorized — 150,000,000 shares;

Issued and outstanding — 50,703,343 shares at September 26, 2020 and 50,322,930 shares at March 28, 2020 507 503

Issued and outstanding — 50,817,222 shares at December 26, 2020 and 50,322,930 shares at March 28, 2020 508 503

Additional paid-in capital 579,480 553,229

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Balance, September 26, 2020 50,703 $ 507 $ 568,748 $ 137,140 $ ( 38,472 ) $ 667,923

Employee stock purchase plan 22 — 1,868 — — 1,868

Exercise of stock options 50 — 2,578 — — 2,578

Issuance of restricted stock, net of cancellations 42 1 ( 1 ) — — —

Share-based compensation expense — — 6,287 — — 6,287

Net income — — — 31,882 — 31,882

Other comprehensive income — — — — 8,614 8,614

Balance, December 26, 2020 50,817 $ 508 $ 579,480 $ 169,022 $ ( 29,858 ) $ 719,152

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited in thousands)

Common Stock Additional

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Balance, September 28, 2019 50,608 $ 506 $ 533,720 $ 85,634 $ ( 36,106 ) $ 583,754

Employee stock purchase plan 20 1 1,537 — — 1,538

Exercise of stock options 60 — 1,667 — — 1,667

Shares repurchased ( 411 ) ( 4 ) ( 4,335 ) ( 45,661 ) — ( 50,000 )

Issuance of restricted stock, net of cancellations 114 1 ( 1 ) — — —

Share-based compensation expense — — 5,325 — — 5,325

Net income — — — 29,895 — 29,895

Other comprehensive income — — — — 2,401 2,401

Balance, December 28, 2019 50,391 $ 504 $ 537,913 $ 69,868 $ ( 33,705 ) $ 574,580

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

2 unchanged sentences

(Unaudited in thousands)

Six Months Ended

September 26,

2020 September 28,

Nine Months Ended

2020 December 28,

Cash Flows from Operating Activities:

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Proceeds from sale of property, plant and equipment 1,085 16,263

Net cash provided by investing activities 13,239 7,825

Net cash provided by (used in) investing activities 3,658 ( 12,041 )

Cash Flows from Financing Activities:

Net increase in short-term loans 90,000 25,000

Net (decrease) increase in short-term loans ( 60,000 ) 30,000

Repayment of term loan borrowings ( 13,125 ) ( 8,750 )

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Other ( 32 ) 90

Net cash provided by (used in) financing activities 84,633 ( 96,427 )

Net cash used in financing activities ( 65,307 ) ( 142,580 )

Effect of exchange rates on cash and cash equivalents 6,082 ( 124 )

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All intercompany transactions have been eliminated.

Operating results for the six months ended September 26, 2020 are not necessarily indicative of the results that may be expected for the full fiscal year ending April 3, 2021 or any other interim period.

Operating results for the nine months ended December 26, 2020 are not necessarily indicative of the results that may be expected for the full fiscal year ending April 3, 2021 or any other interim period.

The Company has assessed its ability to continue as a going concern.

As of September 26, 2020, the Company has concluded that substantial doubt about its ability to continue as a going concern does not exist.

As of December 26, 2020, the Company has concluded that substantial doubt about its ability to continue as a going concern does not exist.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the annual report on Form 10-K for the fiscal year ended March 28, 2020.

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.

Refer to Note 11, Notes Payable and Long-term Debt , for information pertaining to a payment made on the Company's revolving credit facility that occurred subsequent to September 26, 2020.

There were no other material recognized or unrecognized subsequent events as of or for the six months ended September 26, 2020.

Refer to Note 4, Acquisitions for information pertaining to acquisitions that were signed or closed subsequent to December 26, 2020.

There were no other material recognized or unrecognized subsequent events as of or for the three and nine months ended December 26, 2020.

RECENT ACCOUNTING PRONOUNCEMENTS

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These charges, the majority of which will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal 2023.

During the three and six months ended September 26, 2020, the Company incurred $ 4.4 million and $ 8.0 million, respectively, of restructuring and turnaround costs under this program.

During both the three and six months ended September 28, 2019, the Company incurred $ 2.9 million of restructuring and turnaround costs under this program.

During the three and nine months ended December 26, 2020, the Company incurred $ 3.1 million and $ 11.1 million, respectively, of restructuring and turnaround costs under this program.

During the three and nine months ended December 28, 2019, the Company incurred $ 3.9 million and $6.8 million, respectively, of restructuring and turnaround costs under this program.

Total cumulative charges under this program are $ 22.9 million.

During fiscal 2018, the Company launched a Complexity Reduction Initiative (the “2018 Program”), a company-wide restructuring program designed to improve operational performance and reduce cost, freeing up resources to invest in accelerated growth.

During the three months ended September 26, 2020, the Company incurred minimal charges of restructuring and turnaround costs under this program.

During the six months ended September 26, 2020, the Company incurred $ 0.5 million of restructuring and turnaround costs under this program.

During the three and six months ended September 28, 2019, the Company incurred $ 0.9 million and $ 2.9 million, respectively, of restructuring and turnaround costs under this program.

During the three months ended December 26, 2020, the Company incurred minimal charges of restructuring and turnaround costs under this program.

During the nine months ended December 26, 2020, the Company incurred $ 0.5 million of restructuring and turnaround costs under this program.

During the three and nine months ended December 28, 2019, the Company incurred $ 3.9 million and $ 6.8 million, respectively, of restructuring and turnaround costs under this program.

Total cumulative charges under this program are $ 58.7 million.

The 2018 Program is substantially complete.

The following table summarizes the activity for restructuring reserves related to the 2020 Program and the 2018 Program and prior programs for the six months ended September 26, 2020, substantially all of which relates to employee severance and other employee costs:

The following table summarizes the activity for restructuring reserves related to the 2020 Program and the 2018 Program and prior programs for the nine months ended December 26, 2020, substantially all of which relates to employee severance and other employee costs:

(In thousands) 2020 Program 2018 Program and Prior Programs Total

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Payments ( 1,546 ) ( 887 ) ( 2,433 )

Balance at September 26, 2020 $ 1,091 $ 589 $ 1,680

Balance at December 26, 2020 $ 595 $ 520 $ 1,115

The following presents the restructuring costs by line item within our accompanying unaudited condensed consolidated statements of income and comprehensive income:

Three Months Ended Six Months Ended

(In thousands) September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Three Months Ended Nine Months Ended

(In thousands) December 26,

2020 December 28,

2019 December 26,

2020 December 28,

Cost of goods sold $ ( 49 ) $ 2 $ 218 $ 444

2 unchanged sentences

$ ( 92 ) $ 617 $ 900 $ 2,929

As of September 26, 2020, the Company had a restructuring liability of $ 1.7 million, of which $ 1.2 million is payable within the next twelve months.

As of December 26, 2020, the Company had a restructuring liability of $ 1.1 million, of which $ 0.7 million is payable within the next twelve months.

In addition to the restructuring costs included in the table above, the Company also incurred costs that do not constitute restructuring under ASC 420, Exit and Disposal Cost Obligations, and which the Company instead refers to as turnaround costs.

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The tables below present restructuring and turnaround costs by reportable segment:

Restructuring costs Three Months Ended Six Months Ended

(In thousands) September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

Restructuring costs Three Months Ended Nine Months Ended

(In thousands) December 26, 2020 December 28, 2019 December 26, 2020 December 28, 2019

Plasma $ ( 27 ) $ 4 $ 454 $ 552

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Total $ ( 92 ) $ 617 $ 900 $ 2,929

Turnaround costs Three Months Ended Six Months Ended

(In thousands) September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

Turnaround costs Three Months Ended Nine Months Ended

(In thousands) December 26, 2020 December 28, 2019 December 26, 2020 December 28, 2019

Plasma $ 431 $ 108 $ 1,235 $ 187

4 unchanged sentences

Total restructuring and turnaround costs $ 3,143 $ 7,798 $ 11,583 $ 13,582

Cardiva Medical, Inc.

On January 17, 2021, the Company entered into an Agreement and Plan of Merger with Cardiva Medical, Inc., (“Cardiva”), an industry-leading manufacturer of vascular closure systems based in Santa Clara, California.

In connection with this acquisition, the Company will pay upfront consideration of $ 475.0 million in cash, subject to customary working capital and certain other adjustments as of the closing of the transaction, as well as up to $ 35.0 million in additional contingent consideration payable over the next two years based on sales growth.

The transaction is not subject to a financing contingency, and the Company expects to finance the transaction through a combination of its cash on hand, revolving credit facility and an additional $ 150.0 million term loan anticipated to be borrowed under its existing credit facility.

The transaction is expected to close in the fourth quarter of fiscal 2021.

Cardiva’s portfolio includes two catheter-based vascular access site closure devices.

The VASCADE ® vascular closure system is designed for “small-bore” femoral arterial and venous closure, generally used in interventional cardiology and peripheral vascular procedures.

The VASCADE MVP ® vascular closure system is designed for “mid-bore” multi-access femoral venous closure, generally used in electrophysiology procedures, and is the only U.S.

Food and Drug Administration (“FDA”) approved closure device for use following cardiac ablation procedures requiring two or more access sites within the same vessel.

The addition of the VASCADE portfolio to the Hospital business unit includes products with demonstrated benefits and enhances penetration into the large and growing interventional cardiology and electrophysiology markets.

HAS Intellectual Property

In January 2021, the Company entered into an agreement to acquire certain intellectual property owned by HemoAssay Science and Technology (Suzhou) Co.

Ltd., a China-incorporated company, and its affiliates (collectively, “HemoAssay”) underlying their HAS viscoelastic diagnostic devices, related assays and disposables.

The Company previously entered into exclusive manufacturing and distribution agreements with HemoAssay pursuant to which it has exclusive rights to commercialize HemoAssay’s HAS devices in China.

In connection with the transaction, the Company has agreed to pay up to $ 15.0 million to HemoAssay in contingent consideration based on certain developmental and manufacturing based milestones.

These products augment the Company's portfolio of hemostasis analyzers within the Hospital business unit.

On April 1, 2020, the Company acquired all of the outstanding equity of enicor GmbH (“enicor”), the manufacturer of ClotPro ® , a new generation whole blood coagulation testing system that is currently available in select European and Asia Pacific markets, for total consideration of $ 20.5 million, which consisted of upfront payments of $ 16.6 million and the fair value of contingent consideration of $ 3.9 million.

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The final determination of the fair value of certain assets and liabilities will be completed within the measurement period as required by Topic 805.

As of September 26, 2020, the valuation studies necessary to determine the fair market value of the assets acquired and liabilities assumed are preliminary, including the projection of the underlying cash flows used to determine the fair value of the identified tangible, intangible and financial assets and liabilities.

The following amounts represent the preliminary determination of the fair value of the identifiable assets acquired and liabilities assumed for enicor completed during the first six months of fiscal 2021:

(In thousands) September 26, 2020

As of December 26, 2020, the valuation studies necessary to determine the fair market value of the assets acquired and liabilities assumed are preliminary, including the projection of the underlying cash flows used to determine the fair value of the identified tangible, intangible and financial assets and liabilities.

(In thousands) December 26, 2020

Inventory $ 634

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Acquisition-Related Costs

The amount of acquisition-related costs incurred associated with the acquisition was $ 0.2 million for the three and six months ended September 26, 2020.

The amount of acquisition-related costs incurred associated with the acquisition was $ 0.2 million for the three and nine months ended December 26, 2020.

Unaudited Pro Forma Financial Information

Enicor had an immaterial impact to the Company's net revenues and net income for the period post acquisition through September 26, 2020.

Enicor had an immaterial impact to the Company's net revenues and net income for the period post acquisition through December 26, 2020.

The unaudited estimated pro forma impact of the results of the acquisition of enicor as if it was consummated on March 29, 2020 are immaterial.

4 unchanged sentences

The Company also agreed to provide certain transition services to GVS, generally for a period of up to three months depending on the nature of the service.

As a result of this transaction, Haemonetics recognized a pre-tax impairment charge of $ 1.0 million in the first quarter of fiscal 2021 within the Blood Center business unit, as the carrying value of the assets and liabilities in the asset transfer exceeded the net of the $ 15.5 million of cash proceeds and an additional contingent liability of $ 1.5 million.

As a result of this transaction, Haemonetics recognized a pre-tax impairment charge in its Blood Center business unit of $ 1.0 million in the first quarter of fiscal 2021 and an incremental loss of $ 0.4 million based on closing adjustments during the third quarter of fiscal 2021, as the carrying value of the assets and liabilities in the asset transfer exceeded the net of the $ 15.1 million of cash proceeds and an additional contingent liability of $ 1.5 million.

The disposal group consisted of $ 3.3 million of inventory, $ 7.2 million of fixed assets, $ 3.2 million of other liabilities, and $ 0.4 million of goodwill allocated based on fair value to the business.

2 unchanged sentences

blood donor management software solution assets within its Blood Center business unit to the GPI Group (“GPI”) for an upfront cash payment of $ 14.0 million ($ 13.6 million, net of working capital adjustments) and up to $ 14.0 million in additional consideration contingent on the achievement of commercial milestones over the twelve month period immediately following the closing of the transaction.

The disposal group consisted $ 1.4 million of accounts receivable, $ 0.9 million of intangible assets, other liabilities of $ 1.8 million and $ 1.4 million of goodwill allocated based on fair value to the business.

The Company recognized an $ 11.7 million gain upon closing of the transaction in the second quarter of fiscal 2021 and to the extent the additional contingent consideration is earned and realized in a future period then such amounts will be recorded as additional gains in such future period.

The disposal group consisted of $ 1.4 million of accounts receivable, $ 0.9 million of intangible assets, other liabilities of $ 1.8 million and $ 1.4 million of goodwill allocated based on fair value to the business.

The Company recognized an $ 11.7 million gain upon closing of the transaction in the second quarter of fiscal 2021 and an additional $ 1.5 million gain in the third quarter of fiscal 2021.

To the extent the additional contingent consideration is earned and realized in a future period then such amounts will be recorded as additional gains in such future period.

The Company also agreed to provide certain transition services to GPI, generally for a period of one to nine months depending on the nature of the service.

Inlog Holdings France

On September 18, 2020, the Company sold its wholly-owned subsidiary Inlog Holdings France SAS to Abénex Capital ("Abénex"), a private equity firm based in France for $ 30.5 million ($ 24.5 million, net of cash transferred), of which $ 29.2 million was received at closing and $ 1.3 million will be received one-year from the closing date.

On September 18, 2020, the Company sold its wholly-owned subsidiary Inlog Holdings France SAS to Abénex Capital (“Abénex”), a private equity firm based in France for $ 30.5 million ($ 24.5 million, net of cash transferred), of which

$ 29.2 million was received at closing and $ 1.3 million will be received one-year from the closing date.

Inlog Holdings France SAS, through its subsidiary In Log SAS, develops and sells blood bank and hospital software solutions used predominantly in France and in several other countries outside of the U.S.

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statutory tax rate.

For the three and six months ended September 26, 2020, the Company reported income tax expense of $ 6.9 million and $ 4.3 million, respectively, representing effective tax rates of 12.5 % and 6.8 %, respectively.

The effective tax rate for the three and six months ended September 26, 2020 includes discrete tax benefits recognized from excess stock compensation deductions of $ 0.1 million and $ 4.1 million, respectively.

For the three and nine months ended December 26, 2020, the Company reported income tax expense of $ 5.5 million and $ 9.8 million, respectively, representing effective tax rates of 14.7 % and 9.8 %, respectively.

The effective tax rate for the three and nine months ended December 26, 2020 includes discrete tax benefits recognized from excess stock compensation deductions of $ 1.0 million and $ 5.1 million, respectively.

The effective tax rates were also impacted by the jurisdictional mix of earnings including divestiture transactions.

During the three and six months ended September 26, 2020, the Company sold its Fajardo, Puerto Rico manufacturing operations, certain U.S.

During the nine months ended December 26, 2020, the Company sold its Fajardo, Puerto Rico manufacturing operations, certain U.S.

blood donor management software solution assets, and its wholly-owned subsidiary Inlog Holdings France SAS.

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Refer to Note 5, Divestitures , for information pertaining to these divestitures.

For the three and six months ended September 28, 2019, the Company reported an income tax provision of $ 7.6 million and a benefit of $ 1.6 million, respectively, representing effective tax rates of 16.9 % and ( 6.0 )%, respectively.

The effective tax rate

for the six months ended September 28, 2019 was lower than the U.S.

For the three and nine months ended December 28, 2019, the Company reported an income tax provision of $ 7.9 million and $ 6.3 million, respectively, representing effective tax rates of 21.0 % and 9.6 %, respectively.

The effective tax rate for the nine months ended December 28, 2019 was lower than the U.S.

statutory tax rate primarily due to a discrete tax benefit recognized from excess stock compensation deductions of $ 3.1 million and $ 12.4 million, respectively.

2 unchanged sentences

The following table provides a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations.

Three Months Ended Six Months Ended

(In thousands, except per share amounts) September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Three Months Ended Nine Months Ended

(In thousands, except per share amounts) December 26,

2020 December 28,

2019 December 26,

2020 December 28,

Net income $ 31,882 $ 29,895 $ 90,510 $ 58,902

8 unchanged sentences

Diluted earnings per share is calculated using its weighted-average outstanding common stock including the dilutive effect of stock awards as determined under the treasury stock method.

For the three and six months ended September 26, 2020, weighted average shares outstanding, assuming dilution, excludes the impact of 0.8 million and 0.6 million anti-dilutive shares, respectively.

For the three and six months ended September 28, 2019, weighted average shares outstanding, assuming dilution, excludes the impact of 12,421 shares and 0.2 million anti-dilutive shares, respectively.

For the three and nine months ended December 26, 2020, weighted average shares outstanding, assuming dilution, excludes the impact of 0.4 million and 0.6 million anti-dilutive shares, respectively.

For both the three and nine months ended December 28, 2019, weighted average shares outstanding, assuming dilution, excludes the impact of 0.2 million anti-dilutive shares.

The Company's revenue recognition policy is to recognize revenues from product sales, software and services in accordance with ASC Topic 606, Revenue from Contracts with Customers .

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For goods or services for which observable standalone selling prices are not available, the Company uses an expected cost plus a margin approach to estimate the standalone selling price of each performance obligation.

As of September 26, 2020, the Company had $ 19.1 million of its transaction price allocated to remaining performance obligations related to executed contracts with an original duration of one year or more.

As of December 26, 2020, the Company had $ 17.9 million of its transaction price allocated to remaining performance obligations related to executed contracts with an original duration of one year or more.

The Company expects to recognize approximately 59 % of this amount as revenue within the next twelve months and the remaining balance thereafter.

1 unchanged sentence

The difference in timing between billing and revenue recognition primarily occurs in software licensing arrangements, resulting in contract assets and contract liabilities.

As of September 26, 2020 and March 28, 2020, the Company had contract assets of $ 6.7 million and $ 5.0 million, respectively.

As of December 26, 2020 and March 28, 2020, the Company had contract assets of $ 5.4 million and $ 5.0 million, respectively.

The change is primarily due to the delay in billings compared to the revenue recognized.

Contract assets are classified as other current assets and other long-term assets on the condensed consolidated balance sheets.

As of September 26, 2020 and March 28, 2020, the Company had contract liabilities of $ 17.5 million and $ 20.8 million, respectively.

During the three and six months ended September 26, 2020, the Company recognized $ 4.8 million and $ 13.7 million, respectively, of revenue that was included in the above March 28, 2020 contract liability balance.

Contract liabilities decreased by an additional $ 2.5 million during the three and six months ended September 26, 2020 as a result of the sale of certain U.S.

As of December 26, 2020 and March 28, 2020, the Company had contract liabilities of $ 16.7 million and $ 20.8 million, respectively.

During the three and nine months ended December 26, 2020, the Company recognized $ 2.5 million and $ 16.3 million, respectively, of revenue that was included in the above March 28, 2020 contract liability balance.

Contract liabilities decreased by an additional $ 2.5 million during the three and nine months ended December 26, 2020 as a result of the sale of certain U.S.

blood donor management software solution assets and the Company's wholly-owned subsidiary Inlog Holdings France SAS.

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Cost is determined using the first-in, first-out method.

(In thousands) September 26,

(In thousands) December 26,

2020 March 28,

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During the first quarter of fiscal 2021, the Company recorded a right-of-use asset of $ 11.3 million and corresponding liabilities of $ 15.4 million upon commencement of the lease term in May 2020.

In addition, the Company recorded a $ 4.1 million lease incentive receivable associated with this lease agreement.

In addition, the Company recorded a $ 4.1

million lease incentive receivable associated with this lease agreement which was received during the third quarter of fiscal 2021.

Lessor Activity

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Under the Credit Facilities, the Company is required to maintain certain leverage and interest coverage ratios specified in the credit agreement as well as other customary non-financial affirmative and negative covenants.

At September 26, 2020, $ 315.0 million was outstanding under the Term Loan with an effective interest rate of 1.4 % and $ 150.0 million was outstanding on the Revolving Credit Facility.

On October 8, 2020, subsequent to the balance sheet date, the Company reduced its borrowings on the Revolving Credit Facility by $ 150.0 million.

The Company also has $ 26.2 million of uncommitted operating lines of credit to fund its global operations under which there were no outstanding borrowings as of September 26, 2020.

At December 26, 2020, $ 310.6 million was outstanding under the Term Loan with an effective interest rate of 1.4 %.

There were no borrowings outstanding on the Revolving Credit Facility.

The Company also has $ 26.2 million of uncommitted operating lines of credit to fund its global operations under which there were no outstanding borrowings as of December 26, 2020.

The Company has required scheduled principal payments of $ 8.7 million during the remainder of fiscal 2021, $ 17.5 million during fiscal 2022, $ 214.4 million during fiscal 2023 and $ 70.0 million during fiscal 2024.

The Company was in compliance with the leverage and interest coverage ratios specified in the Credit Facilities as well as all other bank covenants as of September 26, 2020.

The Company was in compliance with the leverage and interest coverage ratios specified in the Credit Facilities as well as all other bank covenants as of December 26, 2020.

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The Company manufactures, markets and sells its products globally.

During the three and six months ended September 26, 2020, 40.8 % and 42.0 %, respectively, of the Company's sales were generated outside the U.S., generally in foreign currencies.

During the three and nine months ended December 26, 2020, 38.6 % and 40.7 %, respectively, of the Company's sales were generated outside the U.S., generally in foreign currencies.

The Company also incurs certain manufacturing, marketing and selling costs in international markets in local currency.

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Designated Foreign Currency Hedge Contracts

All of the Company's designated foreign currency hedge contracts as of September 26, 2020 and March 28, 2020 were cash flow hedges under ASC 815, Derivatives and Hedging ("ASC 815").

All of the Company's designated foreign currency hedge contracts as of December 26, 2020 and March 28, 2020 were cash flow hedges under ASC 815, Derivatives and Hedging (“ASC 815”).

The Company records the effective portion of any change in the fair value of designated foreign currency hedge contracts in other comprehensive income until the related third-party transaction occurs.

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In the event the hedged forecasted transaction does not occur, or it becomes probable that it will not occur, the Company would reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time.

The Company had designated foreign currency hedge contracts outstanding in the contract amount of $ 42.5 million as of September 26, 2020 and $ 93.8 million as of March 28, 2020.

At September 26, 2020, a gain of $ 1.6 million, net of tax, will be reclassified to earnings within the next twelve months.

Substantially all currency cash flow hedges outstanding as of September 26, 2020 mature within twelve months.

The Company had designated foreign currency hedge contracts outstanding in the contract amount of $ 78.8 million as of December 26, 2020 and $ 93.8 million as of March 28, 2020.

At December 26, 2020, a loss of $ 1.4 million, net of tax, will be reclassified to earnings within the next twelve months.

Substantially all currency cash flow hedges outstanding as of December 26, 2020 mature within twelve months.

Non-Designated Foreign Currency Contracts

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These forward contracts are marked-to-market with changes in fair value recorded to earnings.

The Company had non-designated foreign currency hedge contracts under ASC 815 outstanding in the contract amount of $ 94.7 million as of September 26, 2020 and $ 98.0 million as of March 28, 2020.

The Company had non-designated foreign currency hedge contracts under ASC 815 outstanding in the contract amount of $ 90.5 million as of December 26, 2020 and $ 98.0 million as of March 28, 2020.

Interest Rate Swaps

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The Company designated the Swaps as cash flow hedges of variable interest rate risk associated with $ 345.6 million of indebtedness.

For the six months ended September 26, 2020, a gain of $ 2.2 million, net of tax, was recorded in accumulated other comprehensive loss to recognize the effective portion of the fair value of the Swaps that qualify as cash flow hedges.

For the nine months ended December 26, 2020, a gain of $ 0.3 million, net of tax, was recorded in accumulated other comprehensive loss to recognize the effective portion of the fair value of the Swaps that qualify as cash flow hedges.

Trade Receivables

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The following is a rollforward of the allowance for credit losses:

Three Months Ended Six Months Ended

(In thousands) September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

Three Months Ended Nine Months Ended

(In thousands) December 26, 2020 December 28, 2019 December 26, 2020 December 28, 2019

Beginning balance $ 2,699 $ 4,108 $ 3,824 $ 3,937

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Fair Value of Derivative Instruments

The following table presents the effect of the Company's derivative instruments designated as cash flow hedges and those not designated as hedging instruments under ASC 815 in its condensed consolidated statements of income and comprehensive income for the six months ended September 26, 2020:

(In thousands) Amount of Gain

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Designated interest rate swaps, net of tax $ ( 2,996 ) $ ( 3,326 ) Interest and other expense, net $ —

The Company did not have fair value hedges or net investment hedges outstanding as of September 26, 2020 or March 28, 2020.

As of September 26, 2020, no material deferred tax assets were recognized for designated foreign currency hedges.

The Company did not have fair value hedges or net investment hedges outstanding as of December 26, 2020 or March 28, 2020.

As of December 26, 2020, no material deferred tax assets were recognized for designated foreign currency hedges.

ASC 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet.

instruments at the reporting date and by taking into account current interest rates, currency exchange rates, current interest rate curves, interest rate volatilities, the creditworthiness of the counterparty for assets, and its creditworthiness for liabilities.

The Company determines the fair value of its derivative instruments using the framework prescribed by ASC 820, Fair Value Measurements and Disclosures , by considering the estimated amount it would receive or pay to sell or transfer these instruments at the reporting date and by taking into account current interest rates, currency exchange rates, current interest rate curves, interest rate volatilities, the creditworthiness of the counterparty for assets, and its creditworthiness for liabilities.

In certain instances, the Company may utilize financial models to measure fair value.

3 unchanged sentences

and inputs derived principally from, or corroborated by, observable market data by correlation or other means.

As of September 26, 2020, the Company has classified its derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by ASC 815, as discussed below, because these observable inputs are available for substantially the full term of its derivative instruments.

The following tables present the fair value of the Company's derivative instruments as they appear in its condensed consolidated balance sheets as of September 26, 2020 and March 28, 2020:

As of December 26, 2020, the Company has classified its derivative

assets and liabilities within Level 2 of the fair value hierarchy prescribed by ASC 815, as discussed below, because these observable inputs are available for substantially the full term of its derivative instruments.

The following tables present the fair value of the Company's derivative instruments as they appear in its condensed consolidated balance sheets as of December 26, 2020 and March 28, 2020:

(In thousands) Location in Condensed Consolidated

Balance Sheets As of As of

September 26, 2020 March 28, 2020

December 26, 2020 March 28, 2020

Derivative Assets:

16 unchanged sentences

Fair Value Measured on a Recurring Basis

Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of September 26, 2020 and March 28, 2020.

As of September 26, 2020

Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of December 26, 2020 and March 28, 2020.

As of December 26, 2020

(In thousands) Level 1 Level 2 Level 3 Total

26 unchanged sentences

Fair Value at Valuation Unobservable

(In thousands) September 26, 2020 Technique Input Range

(In thousands) December 26, 2020 Technique Input Range

Revenue-based payments $ 1,920 Discounted cash flow Discount rate 8.5 %

3 unchanged sentences

Projected year of payment 2021 - 2023

As of September 26, 2020, the maximum potential contingent consideration that the Company could be required to pay is $ 4.5 million.

The fair value of contingent consideration associated with acquisitions was $ 3.9 million at September 26, 2020.

As of September 26, 2020, $ 0.5 million was included in other current liabilities and $ 3.4 million was included in other liabilities on the condensed consolidated balance sheet.

As of December 26, 2020, the maximum potential contingent consideration that the Company could be required to pay is $ 4.5 million.

The fair value of contingent consideration associated with acquisitions was $ 3.9 million at December 26, 2020.

As of December 26, 2020, $ 0.5 million was included in other liabilities and $ 3.4 million was included in other long-term liabilities on the condensed consolidated balance sheet.

A reconciliation of the change in the fair value of contingent consideration is included in the following table:

3 unchanged sentences

Change in fair value —

Balance at September 26, 2020 $ 3,920

Balance at December 26, 2020 $ 3,920

Other Fair Value Disclosures

5 unchanged sentences

Legal costs are expensed as incurred.

During the third quarter of fiscal 2021, the Company received a subpoena from the U.S.

Attorney’s Office for the District of Massachusetts.

The subpoena requests certain documents regarding the Company’s apheresis and autotransfusion devices and disposables, including documents relating to product complaints and adverse event reporting, regulatory clearances and product design changes, among other matters.

The Company is fully cooperating with this inquiry.

SEGMENT AND ENTERPRISE-WIDE INFORMATION

6 unchanged sentences

Management excludes certain corporate expenses from segment operating income.

In addition, certain amounts that management considers to be non-recurring or non-operational are excluded from segment operating income because management evaluates the operating results of the segments excluding such items.

In addition, certain amounts that management considers to be non-

recurring or non-operational are excluded from segment operating income because management evaluates the operating results of the segments excluding such items.

These items include restructuring and turnaround costs, deal amortization, gains on divestitures and sale of assets, asset impairments and other related charges, accelerated depreciation and related costs, costs related to compliance with the European Union Medical Device Regulation, transaction costs and certain legal charges.

Although these amounts are excluded from segment operating income, as applicable, they are included in the reconciliations

Although these amounts are excluded from segment operating income, as applicable, they are included in the reconciliations that follow.

Management measures and evaluates the Company's net revenues and operating income using internally derived standard currency exchange rates that remain constant from year to year;

1 unchanged sentence

Selected information by reportable segment is presented below:

Three Months Ended Six Months Ended

(In thousands) September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Three Months Ended Nine Months Ended

(In thousands) December 26,

2020 December 28,

2019 December 26,

2020 December 28,

Plasma $ 102,154 $ 120,997 $ 249,587 $ 348,141

6 unchanged sentences

(1) Reflects revenue for service, maintenance and parts

Three Months Ended Six Months Ended

(In thousands) September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Three Months Ended Nine Months Ended

(In thousands) December 26,

2020 December 28,

2019 December 26,

2020 December 28,

Segment operating income

20 unchanged sentences

Net revenues by product line are as follows:

Three Months Ended Six Months Ended

(In thousands) September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Three Months Ended Nine Months Ended

(In thousands) December 26,

2020 December 28,

2019 December 26,

2020 December 28,

Plasma products and services $ 123,510 $ 141,231 $ 309,933 $ 406,825

3 unchanged sentences

Net revenues generated in the Company's principle operating regions on a reported basis are as follows:

Three Months Ended Six Months Ended

(In thousands) September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Three Months Ended Nine Months Ended

(In thousands) December 26,

2020 December 28,

2019 December 26,

2020 December 28,

United States $ 147,607 $ 167,238 $ 382,600 $ 485,493

13 unchanged sentences

Net current period other comprehensive income 12,031 — 3,246 15,277

Balance as of September 26, 2020 $ ( 25,755 ) $ ( 209 ) $ ( 12,508 ) $ ( 38,472 )

Balance as of December 26, 2020 $ ( 19,069 ) $ ( 209 ) $ ( 10,580 ) $ ( 29,858 )

(1) Presented net of income taxes, the amounts of which are insignificant.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements