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Item 1. Financial Statements

2021-11-09 compared with 2021-08-11 · 152 added, 114 removed, 551 unchanged (33% of the section changed)

1 unchanged sentence

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited in thousands, except per share data)

Three Months Ended

2021 June 27,

Three Months Ended Six Months Ended

2021 September 26,

2020 October 2,

2021 September 26,

Net revenues $ 239,897 $ 209,486 $ 468,425 $ 405,063

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Interest and other expense, net ( 4,588 ) ( 3,826 ) ( 8,986 ) ( 7,561 )

(Loss) income before provision (benefit) for income taxes ( 3,008 ) 7,980

Provision (benefit) for income taxes 1,446 ( 2,547 )

Net (loss) income $ ( 4,454 ) $ 10,527

Net (loss) income per share - basic $ ( 0.09 ) $ 0.21

Net (loss) income per share - diluted $ ( 0.09 ) $ 0.21

Income before provision for income taxes 19,922 54,956 16,914 62,936

Provision for income taxes 5,066 6,855 6,512 4,308

Net income $ 14,856 $ 48,101 $ 10,402 $ 58,628

Net income per share - basic $ 0.29 $ 0.95 $ 0.20 $ 1.16

Net income per share - diluted $ 0.29 $ 0.94 $ 0.20 $ 1.15

Weighted average shares outstanding

1 unchanged sentence

Diluted 51,458 51,093 51,358 51,170

Comprehensive (loss) income $ ( 4,007 ) $ 11,956

Comprehensive income $ 14,420 $ 53,335 $ 10,413 $ 65,291

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

5 unchanged sentences

Cash and cash equivalents $ 192,420 $ 192,305

Accounts receivable, less allowance of $2,236 at July 3, 2021 and $2,226 at April 3, 2021 132,908 127,555

Accounts receivable, less allowance of $2,701 at October 2, 2021 and $2,226 at April 3, 2021 141,305 127,555

Inventories, net 322,661 322,614

2 unchanged sentences

Property, plant and equipment, net 223,747 217,559

Intangible assets, less accumulated amortization of $335,060 at July 3, 2021 and $320,640 at April 3, 2021 353,688 365,483

Intangible assets, less accumulated amortization of $348,336 at October 2, 2021 and $320,640 at April 3, 2021 337,249 365,483

Goodwill 468,590 466,444

15 unchanged sentences

Authorized — 150,000,000 shares;

Issued and outstanding — 51,012,969 shares at July 3, 2021 and 50,868,820 shares at April 3, 2021 510 509

Issued and outstanding — 51,060,192 shares at October 2, 2021 and 50,868,820 shares at April 3, 2021 511 509

Additional paid-in capital 558,156 602,727

21 unchanged sentences

Balance, July 3, 2021 51,013 $ 510 $ 551,108 $ 154,562 $ ( 29,100 ) $ 677,080

Exercise of stock options 28 1 1,069 — — 1,070

Issuance of restricted stock, net of cancellations 19 — — — — —

Share-based compensation expense — — 5,979 — — 5,979

Net income — — — 14,856 — 14,856

Other comprehensive income — — — — ( 436 ) ( 436 )

Balance, October 2, 2021 51,060 $ 511 $ 558,156 $ 169,418 $ ( 29,536 ) $ 698,549

Common Stock Additional

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Balance, June 27, 2020 50,671 $ 507 $ 562,729 $ 89,039 $ ( 43,706 ) $ 608,569

Exercise of stock options 2 — 67 — — 67

Issuance of restricted stock, net of cancellations 30 — — — — —

Share-based compensation expense — — 5,952 — — 5,952

Net income — — — 48,101 — 48,101

Other comprehensive income — — — — 5,234 5,234

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

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

2 unchanged sentences

(Unaudited in thousands)

Three Months Ended

2021 June 27,

Six Months Ended

2021 September 26,

Cash Flows from Operating Activities:

Net (loss) income $ ( 4,454 ) $ 10,527

Net income $ 10,402 $ 58,628

Adjustments to reconcile net income to net cash provided by operating activities:

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Gains on divestitures and sale of assets ( 9,603 ) ( 31,498 )

Deferred tax benefit 898 ( 3,031 )

Contingent consideration expense 9,345 —

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Change in accounts payable and accrued expenses ( 25,449 ) ( 24,770 )

Net cash (used in) provided by operating activities ( 1,680 ) 11,812

Net cash provided by operating activities 41,780 40,967

Cash Flows from Investing Activities:

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Proceeds from sale of property, plant and equipment 860 902

Net cash used in investing activities ( 15,851 ) ( 23,896 )

Net cash (used in) provided by investing activities ( 36,371 ) 13,239

Cash Flows from Financing Activities:

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Supplemental Disclosures of Cash Flow Information:

Interest paid $ 1,482 $ 2,780

Income taxes paid $ 14,494 $ 2,063

Non-Cash Investing and Financing Activities:

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All intercompany transactions have been eliminated.

Operating results for the three months ended July 3, 2021 are not necessarily indicative of the results that may be expected for the full fiscal year ending April 2, 2022 or any other interim period.

Operating results for the six months ended October 2, 2021 are not necessarily indicative of the results that may be expected for the full fiscal year ending April 2, 2022 or any other interim period.

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

As of July 3, 2021, the Company has concluded that substantial doubt about its ability to continue as a going concern does not exist.

As of October 2, 2021, 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 April 3, 2021.

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Subsequent events have been evaluated as required.

There were no material recognized or unrecognized subsequent events as of or for the three months ended July 3, 2021.

There were no material recognized or unrecognized subsequent events as of or for the six months ended October 2, 2021.

RECENT ACCOUNTING PRONOUNCEMENTS

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The impact to retained earnings on the Condensed Consolidated Balance Sheets as of April 4, 2021 is an increase of $ 1.0 million.

In July 2021, the FASB issued ASC Update No.

Leases (Topic 842).

The new guidance requires a lessor to classify a lease with variable lease payments that do not depend on an index or rate as an operating lease at lease commencement if the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria of ASC 842 and the lessor would have otherwise recognized a day-one loss.

The Company prospectively adopted ASC Update No.

2021-05 effective in the second quarter of fiscal year 2022.

The adoption did not have a material impact on the financial position or results of operations.

RESTRUCTURING

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The majority of charges will result in cash outlays, including severance and other employee costs, and will be incurred as the specific actions required to execute these initiatives are identified and approved.

During the three months ended July 3, 2021 and June 27, 2020, the Company incurred $ 9.9 million and $ 3.5 million, respectively, of restructuring and restructuring related costs under this program.

During the three and six months ended October 2, 2021, the Company incurred $ 4.6 million and $ 14.5 million, respectively, of restructuring and restructuring related costs under this program.

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

Total cumulative charges under this program are $ 41.5 million.

The following table summarizes the activity for restructuring reserves related to the 2020 Program and prior programs for the three months ended July 3, 2021, 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 prior programs for the six months ended October 2, 2021, substantially all of which relates to employee severance and other employee costs:

(In thousands) 2020 Program Prior Programs Total

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Payments ( 1,448 ) ( 11 ) ( 1,459 )

Non-cash adjustments — 11 11

Balance at July 3, 2021 $ 3,903 $ 477 $ 4,380

The following presents the restructuring costs by line item within our accompanying unaudited Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income:

Three Months Ended

(In thousands) July 3,

2021 June 27,

Balance at October 2, 2021 $ 3,214 $ 454 $ 3,668

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) October 2,

2021 September 26,

2020 October 2,

2021 September 26,

Cost of goods sold $ 210 $ ( 236 ) $ 2,463 $ 267

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$ 695 $ ( 73 ) $ 4,115 $ 992

As of July 3, 2021, the Company had a restructuring liability of $ 4.4 million, of which $ 3.9 million is payable within the next twelve months.

As of October 2, 2021, the Company had a restr ucturing liability of $ 3.7 million, of which $ 3.2 million is paya ble 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 restructuring related costs.

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

Restructuring costs Three Months Ended

(In thousands) July 3, 2021 June 27, 2020

Restructuring costs Three Months Ended Six Months Ended

(In thousands) October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

Plasma $ 411 $ ( 87 ) $ 2,699 $ 481

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Total $ 695 $ ( 73 ) $ 4,115 $ 992

Restructuring related costs Three Months Ended

(In thousands) July 3, 2021 June 27, 2020

Restructuring related costs Three Months Ended Six Months Ended

(In thousands) October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

Plasma $ 1,403 $ 804 $ 3,141 $ 804

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The assessment of fair value is preliminary and is based on information that was available at the time the consolidated financial statements were prepared.

The most significant open items included the valuation of certain intangible assets and the accounting for income taxes as the Company is awaiting additional information to complete its assessment of these matters.

The most significant open items included the valuation of certain intangible assets and the accounting for income taxes as the Company is finalizing additional information to complete its assessment of these matters.

Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date.

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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 July 3, 2021, 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.

As of October 2, 2021, 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 purchase price of $ 442.3 million, net of $ 47.3 million of cash acquired, consisted of the amounts presented below, which represent the preliminary determination of the fair value of the identifiable assets acquired and liabilities assumed:

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Net assets acquired $ 442,269

The Company determined the identifiable intangible assets were completed technology, customer relationships and trademarks.

The Company determined the identifiable intangible assets were completed technology, customer relationships, trademarks and in-process research and development (“IPR&D”).

The fair values of intangible assets were based on valuation techniques with estimates and assumptions developed by the Company.

Completed technology was valued using the excess earnings method.

Completed technology and IPR&D were valued using the excess earnings method.

Customer relationships were valued using the distributor method.

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In developing the discount rates applied to the cash flow projections, the discount rates were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital and then adjusted to reflect the relative risk of the asset .

As of July 3, 2021, the valuation of the intangible assets is preliminary as the Company is still gathering information related to the assets’ cash flow projections.

As of October 2, 2021, the valuation of the intangible assets is preliminary as the Company is still finalizing information related to the assets’ cash flow projections.

The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill.

As a result of the acquisition of Cardiva, the Company recognized goodwill of $ 251.4 million, which is attributable to the revenue and cash flow projections associated with completed technologies and the development of future technology that does not exist in the current in-process research and development (“IPR&D”) pipeline.

As a result of the acquisition of Cardiva, the Company recognized goodwill of $ 254.0 million, which is attributable to the revenue and cash flow projections associated with completed technologies and the development of future technology that does not exist in the current IPR&D pipeline.

The goodwill is not deductible for tax purposes and relates entirely to the Hospital reportable segment.

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Trademarks 5,437 13 years 13.5 %

IPR&D 13,667 Indefinite 15.0 %

Total $ 250,560

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The amount of acquisition-related costs incurred associated with the acquisition was $ 9.6 million for the fiscal year ending April 3, 2021 .

The Company incurred acquisition costs related legal and other professional fees in the amount of $ 6.6 million and an additional $ 3.0 million of debt financing costs and lender fees which were recognized in selling, general and administrative and as interest expense on the unaudited Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income, respectively.

HAS Intellectual Property

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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.

During the three months ended July 3, 2021, the Company made $ 2.5 million of milestone payments which were recorded within intangible assets on the Condensed Consolidated Balance Sheets.

During the six months ended October 2, 2021, the Company made $ 2.5 million of milestone payments which were recorded within intangible assets on the Condensed Consolidated Balance Sheets.

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

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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 months ended June 27, 2020.

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.

Fajardo, Puerto Rico Manufacturing Operations

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The Company recognized a gain of $ 13.2 million associated with the transaction in fiscal 2021.

During the three months ended July 3, 2021, the Company recognized an additional gain of $ 9.6 million for contingent consideration earned.

During the first quarter of fiscal year 2022, the Company recognized an additional gain of $ 9.6 million for contingent consideration earned.

Inlog Holdings France

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statutory tax rate.

For the three months ended July 3, 2021, the Company reported income tax expense of $ 1.4 million representing an effective tax rate of ( 48.1 )%.

The effective tax rate for the three months ended July 3, 2021 includes $ 0.8 million of discrete tax expense relating to stock compensation shortfalls.

For the three months ended June 27, 2020, the Company reported an income tax benefit of $ 2.5 million representing an effective tax rate benefit of 31.9 %.

The effective tax rate for the three months ended June 27, 2020 includes discrete tax benefits recognized from excess stock compensation deductions of $ 4.0 million.

The effective tax rate was also impacted by the jurisdictional mix of earnings.

During the three months ended June 27, 2020, the Company transferred certain intangible assets amongst its wholly-owned subsidiaries prior to the divestiture of its Fajardo, Puerto Rico manufacturing operations.

The tax expense on the intercompany sale and establishment of deferred tax assets (including the associated valuation allowance impacts) was included in the computation of the annual effective tax rate.

For the three and six months ended October 2, 2021, the Company reported income tax expense of $ 5.1 million and $ 6.5 million, respectively, representing effective tax rates of 25.4 % and 38.5 %, respectively.

The effective tax rates for the three and six months ended October 2, 2021 includes discrete tax expense relating to stock compensation shortfalls of $ 0.1 million and $ 0.9 million, respectively.

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 rates for the three and six months ended September 26, 2020 included discrete tax benefits recognized from excess stock compensation deductions of $ 0.1 million and $ 4.1 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.

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

The tax expense on divestitures, including the associated valuation allowance impacts, were included in the computation of the annual effective tax rate.

EARNINGS PER SHARE

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

Three Months Ended

(In thousands, except per share amounts) July 3,

2021 June 27,

Net (loss) income $ ( 4,454 ) $ 10,527

Three Months Ended Six Months Ended

(In thousands, except per share amounts) October 2,

2021 September 26,

2020 October 2,

2021 September 26,

Net income $ 14,856 $ 48,101 $ 10,402 $ 58,628

Weighted average shares 51,039 50,696 50,989 50,557

Basic income per share $ 0.29 $ 0.95 $ 0.20 $ 1.16

Net (loss) income $ ( 4,454 ) $ 10,527

Net income $ 14,856 $ 48,101 $ 10,402 $ 58,628

Basic weighted average shares 51,039 50,696 50,989 50,557

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From the time of the issuance of the convertible senior notes, the average market price of the Company's common shares has been less than the initial conversion price, and consequently no shares have been included in diluted earnings per share for the conversion value of the convertible senior notes.

For the three months ended July 3, 2021, the Company recognized a net loss;

therefore it excluded the impact of outstanding stock awards from the diluted loss per share calculation as its inclusion would have an anti-dilutive effect.

For the three months ended June 27, 2020, weighted average shares outstanding, assuming dilution, excludes the impact of 0.5 million anti-dilutive shares.

For the three and six months ended October 2, 2021, weighted average shares outstanding, assuming dilution, excludes the impact of 0.9 million anti-dilutive shares.

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.

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 July 3, 2021, the Company had $ 18.4 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 October 2, 2021, the Company had $ 21.0 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 68 % 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 July 3, 2021 and April 3, 2021, the Company had contract assets of $ 4.8 million and $ 4.8 million, respectively.

As of October 2, 2021 and April 3, 2021, the Company had contract assets of $ 4.4 million and $ 4.8 million, respectively.

Contract assets are classified as other current assets and other long-term assets on the Condensed Consolidated Balance Sheets.

As of July 3, 2021 and April 3, 2021, the Company had contract liabilities of $ 24.2 million and $ 20.9 million, respectively.

During the three months ended July 3, 2021, the Company recognized $ 8.6 million of revenue that was included in the above April 3, 2021 contract liability balance.

As of October 2, 2021 and April 3, 2021, the Company had contract liabilities of $ 23.9 million and $ 20.9 million, respectively.

During the three and six months ended October 2, 2021, the Company recognized $ 4.6 million and $ 13.2 million of revenue, respectively, that was included in the above April 3, 2021 contract liability balance.

Inventories are stated at the lower of cost or market and include the cost of material, labor and manufacturing overhead.

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

(In thousands) July 3,

(In thousands) October 2,

2021 April 3,

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Lessor Activity

Assets on the Company's balance sheet classified as Haemonetics equipment primarily consists of medical devices installed at customer sites but owned by Haemonetics.

Assets on the Company's balance sheet classified as Haemonetics equipment primarily consist of medical devices installed at customer sites but owned by Haemonetics.

These devices are leased to customers under contractual arrangements that typically include an operating or sales-type lease as well as the purchase and consumption of a certain level of disposable products.

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The 2026 Notes will mature on March 1, 2026, unless earlier converted, redeemed or repurchased.

During the first quarter of fiscal 2022, the conditions allowing holders of the 2026 Notes to convert have not been met.

The 2026 Notes were therefore not convertible as of July 3, 2021 and were classified as long-term debt on the Company’s Condensed Consolidated Balance Sheets.

During the second quarter of fiscal 2022, the conditions allowing holders of the 2026 Notes to convert have not been met.

The 2026 Notes were therefore not convertible as of October 2, 2021 and were classified as long-term debt on the Company’s Condensed Consolidated Balance Sheets.

In accounting for the issuance of the 2026 Notes, the 2026 Notes were separated into liability and equity components.

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The impact to retained earnings on the Condensed Consolidated Balance Sheets as of April 4, 2021 is an increase of $ 1.0 million.

As of July 3, 2021, the $ 500.0 million principal balance was netted down by $ 12.5 million of deferred financing costs.

As of October 2, 2021, the $ 500.0 million principal balance was netted down by $ 11.9 million of deferred financing costs.

Credit Facilities

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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 July 3, 2021, $ 297.5 million was outstanding under the Term Loan with an effective interest rate of 1.9 %.

At October 2, 2021, $ 293.1 million was outstanding under the Term Loan with an effective interest rate of 1.9 %.

There were no borrowings outstanding on the Revolving Credit Facility.

The Company also has $ 25.5 million of uncommitted operating lines of credit to fund its global operations under which there were no outstanding borrowings as of July 3, 2021.

The Company also has $ 25.6 million of uncommitted operating lines of credit to fund its global operations under which there were no outstanding borrowings as of October 2, 2021.

The Company has required scheduled principal payments of $ 8.8 million during the remainder of 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 July 3, 2021.

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 October 2, 2021.

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The Company manufactures, markets and sells its products globally.

During the three months ended July 3, 2021, 38.3 % of the Company's sales were generated outside the U.S., generally in foreign currencies.

During the three and six months ended October 2, 2021, 36.6 % and 37.4 %, 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 July 3, 2021 and April 3, 2021 were cash flow hedges under ASC 815, Derivatives and Hedging (“ASC 815”).

All of the Company's designated foreign currency hedge contracts as of October 2, 2021 and April 3, 2021 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 $ 40.5 million as of July 3, 2021 and $ 56.0 million as of April 3, 2021.

At July 3, 2021, a loss of $ 0.9 million, net of tax, will be reclassified to earnings within the next twelve months.

Substantially all currency cash flow hedges outstanding as of July 3, 2021 mature within twelve months.

The Company had designated foreign currency hedge contracts outstanding in the contract amount of $ 61.9 million as of October 2, 2021 and $ 56.0 million as of April 3, 2021.

At October 2, 2021, a loss of $ 0.8 million, net of tax, will be reclassified to earnings within the next twelve months.

Substantially all currency cash flow hedges outstanding as of October 2, 2021 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 $ 82.4 million as of July 3, 2021 and $ 95.6 million as of April 3, 2021.

The Company had non-designated foreign currency hedge contracts under ASC 815 outstanding in the contract amount of $ 77.4 million as of October 2, 2021 and $ 95.6 million as of April 3, 2021.

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 three months ended July 3, 2021, a gain of $ 2.0 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 six months ended October 2, 2021, a gain of $ 3.2 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.

Trade Receivables

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

Three Months Ended

(In thousands) July 3, 2021 June 27, 2020

Three Months Ended Six Months Ended

(In thousands) October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

Beginning balance $ 2,236 $ 3,446 $ 2,226 $ 3,824

3 unchanged sentences

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 unaudited Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the three months ended July 3, 2021:

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 unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the six months ended October 2, 2021:

(In thousands) Amount of Gain

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Earnings Location in

Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income Amount of Gain (Loss) Excluded from

Condensed Consolidated Statements of Income and Comprehensive Income Amount of Gain (Loss) Excluded from

Effectiveness

Testing Location in

Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income

Condensed Consolidated Statements of Income and Comprehensive Income

Designated foreign currency hedge contracts, net of tax $ ( 761 ) $ 785 Net revenues, COGS and SG&A $ ( 246 ) Interest and other expense, net

1 unchanged sentence

Designated interest rate swaps, net of tax $ 920 $ ( 2,257 ) Interest and other expense, net $ —

The Company did not have fair value hedges or net investment hedges outstanding as of July 3, 2021 or April 3, 2021.

As of July 3, 2021, 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 October 2, 2021 or April 3, 2021.

As of October 2, 2021, 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.

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

As of July 3, 2021, 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 July 3, 2021 and April 3, 2021:

As of October 2, 2021, 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 October 2, 2021 and April 3, 2021:

(In thousands) Location in Condensed Consolidated

Balance Sheets As of As of

July 3, 2021 April 3, 2021

October 2, 2021 April 3, 2021

Derivative Assets:

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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 July 3, 2021 and April 3, 2021.

As of July 3, 2021

Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of October 2, 2021 and April 3, 2021.

As of October 2, 2021

(In thousands) Level 1 Level 2 Level 3 Total

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Fair Value at Valuation Unobservable

(In thousands) July 3, 2021 Technique Input Range

(In thousands) October 2, 2021 Technique Input Range

Revenue-based payments $ 34,073 Monte Carlo Simulation Model Discount rate 2.2 %

5 unchanged sentences

Projected year of payment 2021 - 2023

As of July 3, 2021, the maximum potential contingent consideration that the Company could be required to pay is $ 39.5 million.

During three months ended July 3, 2021, the Company increased the fair value of the contingent consideration related to the acquisition of Cardiva by $ 9.8 million, which was recorded as selling, general and administrative expenses within the unaudited Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income.

The fair value of contingent consideration associated with acquisitions was $ 38.4 million at July 3, 2021.

As of July 3, 2021, $ 31.7 million was included in other liabilities and $ 6.7 million was included in other long-term liabilities on the condensed consolidated balance sheet.

As of October 2, 2021, the remaining maximum potential contingent consideration that the Company could be required to pay i s $ 39.1 million.

During the six months ended October 2, 2021, the Company increased the fair value of the contingent consideration related to the acquisition of Cardiva by $ 9.8 million, which was recorded as selling, general and administrative expenses within the unaudited Condensed Consolidated Statements of Income and Comprehensive Income.

The fair value of contingent consideration associated with acquisitions was $ 37.5 million at October 2, 2021.

As of October 2, 2021, $ 32.5 million was included in other liabilities and $ 5.0 million was in cluded 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:

2 unchanged sentences

Change in fair value 9,345

Payments ( 367 )

Currency translation ( 194 )

Balance at July 3, 2021 $ 38,402

Balance at October 2, 2021 $ 37,517

Other Fair Value Disclosures

22 unchanged sentences

Selected information by reportable segment is presented below:

Three Months Ended

(In thousands) July 3,

2021 June 27,

Three Months Ended Six Months Ended

(In thousands) October 2,

2021 September 26,

2020 October 2,

2021 September 26,

Plasma $ 82,004 $ 78,718 $ 153,807 $ 147,433

2 unchanged sentences

Net revenues by business unit 233,165 204,455 454,311 398,055

4,951 5,342 10,219 10,424

Effect of exchange rates 1,781 ( 311 ) 3,895 ( 3,416 )

1 unchanged sentence

(1) Reflects revenue for service, maintenance and parts

Three Months Ended

(In thousands) July 3,

2021 June 27,

Three Months Ended Six Months Ended

(In thousands) October 2,

2021 September 26,

2020 October 2,

2021 September 26,

Segment operating income

11 unchanged sentences

Impairment of assets and PCS2 related charges ( 250 ) ( 576 ) ( 3,893 ) ( 3,082 )

European Medical Device Regulation costs and other ( 2,371 ) ( 753 )

MDR and IVDR costs (2)

( 2,347 ) ( 736 ) ( 4,718 ) ( 1,489 )

Litigation-related charges ( 145 ) — ( 1,083 ) —

2 unchanged sentences

(1) Reflects shared service expenses including quality and regulatory, customer and field service, research and development, manufacturing and supply chain, as well as other corporate support functions.

(2) Refers to the European Union Medical Device Regulation (“MDR”) and In Vitro Diagnostic Regulation (“IVDR”) costs.

Management reviews revenue based on the reportable segments noted above.

3 unchanged sentences

Net revenues by product line are as follows:

Three Months Ended

(In thousands) July 3,

2021 June 27,

Three Months Ended Six Months Ended

(In thousands) October 2,

2021 September 26,

2020 October 2,

2021 September 26,

Plasma products and services $ 102,075 $ 97,710 $ 192,584 $ 186,423

3 unchanged sentences

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

Three Months Ended

(In thousands) July 3,

2021 June 27,

Three Months Ended Six Months Ended

(In thousands) October 2,

2021 September 26,

2020 October 2,

2021 September 26,

United States $ 152,106 $ 123,984 $ 293,134 $ 234,993

8 unchanged sentences

Balance as of April 3, 2021 $ ( 21,528 ) $ ( 560 ) $ ( 7,459 ) $ ( 29,547 )

Other comprehensive (loss) income before reclassifications (1)

Other comprehensive income before reclassifications (1)

( 1,619 ) — 158 ( 1,461 )

Amounts reclassified from Accumulated Other Comprehensive Loss (1)

Net current period other comprehensive (loss) income ( 430 ) — 877 447

Balance as of July 3, 2021 $ ( 21,958 ) $ ( 560 ) $ ( 6,582 ) $ ( 29,100 )

Amounts reclassified from Accumulated Other Comprehensive Income (1)

— — 1,472 1,472

Net current period other comprehensive income ( 1,619 ) — 1,630 11

Balance as of October 2, 2021 $ ( 23,147 ) $ ( 560 ) $ ( 5,829 ) $ ( 29,536 )

(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