What changed in this filing

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Item 1. Financial Statements

2022-11-08 compared with 2022-08-10 · 185 added, 115 removed, 439 unchanged (41% of the section changed)

3 unchanged sentences

(Unaudited in thousands, except per share data)

Three Months Ended

Three Months Ended Six Months Ended

2022 October 2,

2021 October 1,

2022 October 2,

Net revenues $ 297,485 $ 239,897 $ 558,943 $ 468,425

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Amortization of intangible assets 8,221 11,400 16,588 23,779

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

Gains on divestiture ( 382 ) — ( 382 ) ( 9,603 )

Total operating expenses 111,146 98,031 222,642 204,726

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Interest and other expense, net ( 5,673 ) ( 4,588 ) ( 10,946 ) ( 8,986 )

Income (loss) before provision for income taxes 25,494 ( 3,008 )

Income before provision for income taxes 41,059 19,922 66,553 16,914

Provision for income taxes 7,862 5,066 13,479 6,512

Net income (loss) $ 19,877 $ ( 4,454 )

Net income (loss) per share - basic $ 0.39 $ ( 0.09 )

Net income (loss) per share - diluted $ 0.38 $ ( 0.09 )

Net income $ 33,197 $ 14,856 $ 53,074 $ 10,402

Net income per share - basic $ 0.65 $ 0.29 $ 1.04 $ 0.20

Net income per share - diluted $ 0.64 $ 0.29 $ 1.03 $ 0.20

Weighted average shares outstanding

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Diluted 51,558 51,458 51,620 51,358

Comprehensive income (loss) $ 13,114 $ ( 4,007 )

Comprehensive income $ 25,659 $ 14,420 $ 38,773 $ 10,413

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

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Cash and cash equivalents $ 241,200 $ 259,496

Accounts receivable, less allowance of $2,495 at July 2, 2022 and $2,475 at April 2, 2022 146,463 159,376

Accounts receivable, less allowance for credit losses of $ 2,495 at October 1, 2022 and $ 2,475 at April 2, 2022

171,532 159,376

Inventories, net 254,680 293,027

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Property, plant and equipment, net 307,844 258,482

Intangible assets, less accumulated amortization of $386,235 at July 2, 2022 and $376,552 at April 2, 2022 302,710 310,261

Intangible assets, less accumulated amortization of $ 395,822 at October 1, 2022 and $ 376,552 at April 2, 2022

292,595 310,261

Goodwill 464,987 467,287

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Authorized — 150,000,000 shares;

Issued and outstanding — 51,315,653 shares at July 2, 2022 and 51,124,240 shares at April 2, 2022 513 511

Issued and outstanding — 50,605,499 shares at October 1, 2022 and 51,124,240 shares at April 2, 2022

Additional paid-in capital 564,394 572,476

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Balance, July 2, 2022 51,315 $ 513 $ 580,359 $ 222,268 $ ( 32,717 ) $ 770,423

Exercise of stock options 50 1 2,191 — — 2,192

Shares repurchased ( 786 ) ( 8 ) ( 23,891 ) ( 51,101 ) — ( 75,000 )

Issuance of restricted stock, net of cancellations 26 — — — — —

Share-based compensation expense — — 5,735 — — 5,735

Net income — — — 33,197 — 33,197

Other comprehensive loss — — — ( 7,538 ) ( 7,538 )

Balance, October 1, 2022 50,605 $ 506 $ 564,394 $ 204,364 $ ( 40,255 ) $ 729,009

Common Stock Additional

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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 loss — — — — ( 436 ) ( 436 )

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

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

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(Unaudited in thousands)

Three Months Ended

Six Months Ended

2022 October 2,

Cash Flows from Operating Activities:

Net income (loss) $ 19,877 $ ( 4,454 )

Net income $ 53,074 $ 10,402

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

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Amortization of deferred finance costs 313 1,813

Benefit for losses on inventory ( 2,075 ) ( 544 )

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

(Benefit) provision for losses on inventory ( 1,529 ) 114

Gains on divestiture ( 382 ) ( 9,603 )

Contingent consideration expense ( 504 ) 9,345

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Change in accounts payable and accrued expenses 8,867 ( 25,449 )

Net cash provided by (used in) operating activities 41,993 ( 1,680 )

Net cash provided by operating activities 129,032 41,780

Cash Flows from Investing Activities:

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Acquisition ( 2,850 ) ( 2,500 )

Proceeds from divestiture 850 —

Proceeds from sale of property, plant and equipment 7,537 860

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Cash Flows from Financing Activities:

Term loan borrowings 280,000 —

Term loan redemption ( 280,000 ) —

Proceeds from revolving facility 50,000 —

Repayment of term loan borrowings ( 6,125 ) ( 8,750 )

Debt issuance costs ( 1,118 ) —

Share repurchases ( 75,000 ) —

Contingent consideration payments ( 21,593 ) —

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All intercompany transactions have been eliminated.

Operating results for the three months ended July 2, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year ending April 1, 2023 or any other interim period.

Operating results for the six months ended October 1, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year ending April 1, 2023 or any other interim period.

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 2, 2022.

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.

Subsequent events have been evaluated as r equired.

There were no material recognized or unrecognized subsequent events as of or for the three months ended July 2, 2022, except for those discussed in Note 5, Earnings Per Share and Note 9, Notes Payable and Long-term Debt .

Subsequent events have been evaluated as required.

There were no material recognized or unrecognized subsequent events as of or for the six months ended October 1, 2022, except those listed below.

In November 2022, the Company made a € 20 million investment in Vivasure Medical LTD, bringing the Company's total investment to € 30 million.

The investment will also be classified as other long-term assets on the Company’s Condensed Consolidated Balance Sheets.

RECENT ACCOUNTING PRONOUNCEMENTS

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

Standards to be Implemented

In March 2020, the FASB issued ASU 2020-04 — Reference Rate Reform (Topic 848).

The new guidance allows companies to elect certain practical expedients to ease the financial reporting burden during the transition period of reference rate reform.

The Company is evaluating the impact of this ASU and the related practical expedients allowed under ASU 848 on the Company's financial position and results of operations.

RESTRUCTURING

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During fiscal 2022, the Company revised the program to improve product and service quality, reduce cost principally in its manufacturing and supply chain operations and ensure sustainability while helping to offset impacts from a previously announced customer loss, rising inflationary pressures and effects of the COVID-19 pandemic.

The Company now expects to incur aggregate charges between $ 95 million and $ 105 million by the end of fiscal 2025.

The Company now expects to incur aggregate charges between $ 95 million and $ 105 million by the end of fiscal 2025 under the program.

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 2, 2022 and July 3, 2021, the Company incurred $ 3.5 million and $ 9.9 million, respectively, of restructuring and restructuring related costs under this program.

During the three and six months ended October 1, 2022, the Company incurred $ 3.1 million and $ 6.6 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.

Total cumulative charges under this program are $ 62.3 million .

The following table summarizes the activity for restructuring reserves related to the 2020 Program and prior programs for the three months ended July 2, 2022, 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 1, 2022, substantially all of which relates to employee severance and other employee costs:

(In thousands) 2020 Program Prior Programs Total

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Payments ( 1,038 ) ( 101 ) ( 1,139 )

Balance at July 2, 2022 $ 1,713 $ 325 $ 2,038

Balance at October 1, 2022 $ 1,481 $ 306 $ 1,787

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

Three Months Ended

(In thousands) July 2,

Three Months Ended Six Months Ended

(In thousands) October 1,

2022 October 2,

2021 October 1,

2022 October 2,

Cost of goods sold $ 29 $ 210 $ ( 177 ) $ 2,463

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$ 165 $ 695 $ 121 $ 4,115

As of July 2, 2022, the Company had a restr ucturing liability of $ 2.0 million , of which $ 1.7 million is paya ble within the next twelve months.

As of October 1, 2022, the Company had a restr ucturing liability of $ 1.8 million , of which $ 1.5 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 2, 2022 July 3, 2021

Restructuring costs Three Months Ended Six Months Ended

(In thousands) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Plasma $ — $ 411 $ ( 211 ) $ 2,699

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Total $ 165 $ 695 $ 121 $ 4,115

Restructuring related costs Three Months Ended

(In thousands) July 2, 2022 July 3, 2021

Restructuring related costs Three Months Ended Six Months Ended

(In thousands) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Plasma $ 108 $ 1,403 $ 748 $ 3,141

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statutory tax rate.

For the three months ended July 2, 2022, the Company reported income tax expense of $ 5.6 million representing an effective tax rate of 22.0 %.

The effective tax rate for the three months ended July 2, 2022 includes $ 0.6 million of discrete tax expense relating to stock compensation shortfalls.

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 and six months ended October 1, 2022, the Company reported income tax expense of $ 7.9 million and $ 13.5 million, respectively, representing effective tax rates of 19.1 % and 20.3 %, respectively.

The effective tax rate for the six months ended October 1, 2022 includes a discrete tax benefit of $ 0.5 million related to tax rate changes enacted in the quarter and $ 0.3 million of discrete tax expense relating to stock compensation shortfalls.

The effective tax rate for the three months ended October 1, 2022, the effective tax rate includes a discrete tax benefit of $ 0.5 million related to tax rate changes enacted in the quarter and $ 0.3 million of discrete tax benefit relating to stock compensation windfalls.

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 include discrete tax expense relating to stock compensation shortfalls of $ 0.1 million and $ 0.9 million, respectively.

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 2,

Net income (loss) $ 19,877 $ ( 4,454 )

Three Months Ended Six Months Ended

(In thousands, except per share amounts) October 1,

2022 October 2,

2021 October 1,

2022 October 2,

Net income $ 33,197 $ 14,856 $ 53,074 $ 10,402

Weighted average shares 50,953 51,039 51,089 50,989

Basic income (loss) per share $ 0.39 $ ( 0.09 )

Net income (loss) $ 19,877 $ ( 4,454 )

Basic income per share $ 0.65 $ 0.29 $ 1.04 $ 0.20

Net income $ 33,197 $ 14,856 $ 53,074 $ 10,402

Basic weighted average shares 50,953 51,039 51,089 50,989

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Diluted weighted average shares 51,558 51,458 51,620 51,358

Diluted income (loss) per share $ 0.38 $ ( 0.09 )

Diluted income per share $ 0.64 $ 0.29 $ 1.03 $ 0.20

Basic earnings per share is calculated using the Company’s weighted-average outstanding common stock.

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 and the convertible senior notes as determined under the net share settlement method.

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 2, 2022, weighted average shares outstanding, assuming dilution, excludes the impact of 0.9 million anti-dilutive shares.

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.

In August 2022, the Company announced that its Board of Directors had authorized the repurchase of up to $ 300 million of Haemonetics common shares over the next three years .

For the three and six months ended October 1, 2022, weighted average shares outstanding, assuming dilution, excludes the impact of 0.7 million and 0.8 million anti-dilutive shares, respectively.

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.

Share Repurchase Program

In August 2022, the Company's Board of Directors authorized the repurchase of up to $ 300 million of Haemonetics common stock over the next three years .

Under the share repurchase program, the Company is authorized to repurchase, from time to time, outstanding shares of common stock in accordance with applicable laws on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and in privately negotiated transactions.

The actual timing, number and value of shares repurchased will be determined by the Company at its discretion, with the intent of beginning activity under the program during fiscal 2023, and will depend on a number of factors, including market conditions, applicable legal requirements and compliance with the terms of loan covenants.

The actual timing, number and value of shares repurchased will be determined by the Company at its discretion and will depend on a number of factors, including market conditions, applicable legal requirements and compliance with the terms of loan covenants.

The share repurchase program may be suspended, modified or discontinued at any time, and the Company has no obligation to repurchase any amount of its common stock under the program.

Subsequent to the Company’s announcement of the share repurchase program, in August 2022, the Company entered into an accelerated share repurchase agreement (“ASR”) with Citibank N.A.

(“Citibank”) to repurchase $ 75.0 million of the Company's common stock.

Pursuant to the terms of the ASR, in August 2022, the Company paid Citibank $ 75.0 million in cash and received an initial delivery of 0.8 million shares of the Company's common stock based on a closing market price on the New York Stock Exchange on August 16, 2022 of $ 76.32 .

This initial delivery of shares represented approximately 80 % of the notional amount of the ASR.

The ASR was completed in November 2022 and approximately 0.2 million additional shares were delivered upon settlement.

As of October 1, 2022, the total remaining authorization for repurchases of the Company's common stock under the share repurchase program was $ 225 million.

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 2, 2022, the Company had $ 24.7 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 1, 2022, the Company had $ 23.0 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 74 % of this amount as revenue within the next twelve months and the remaining balance thereafter.

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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 2, 2022 and April 2, 2022, the Company had contract assets of $ 6.4 million and $ 5.5 million, respectively.

As of October 1, 2022 and April 2, 2022, the Company had contract assets of $ 7.6 million and $ 5.5 million, respectively.

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

As of July 2, 2022 and April 2, 2022, the Company had contract liabilities of $ 25.4 million and $ 26.8 million, respectively.

During the three months ended July 2, 2022, the Company recognized $ 11.7 million of revenue, respectively, that was included in the above April 2, 2022 contract liability balance.

As of October 1, 2022 and April 2, 2022, the Company had contract liabilities of $ 24.4 million and $ 26.8 million, respectively.

During the three and six months ended October 1, 2022, the Company recognized $ 6.8 million and $18.5 million of revenue, respectively, that was included in the above April 2, 2022 contract liability balance.

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

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

(In thousands) July 2,

(In thousands) October 1,

2022 April 2,

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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 2023, the conditions allowing holders of the 2026 Notes to convert have not been met.

The 2026 Notes were therefore not convertible as of July 2, 2022 and were classified as long-term debt on the Company’s Condensed Consolidated Balance Sheets.

During the second quarter of fiscal 2023, the conditions allowing holders of the 2026 Notes to convert have not been met.

The 2026 Notes were therefore not convertible as of October 1, 2022 and were classified as long-term debt on the Company’s Condensed Consolidated Balance Sheets.

On April 4, 2021, the Company adopted ASC Update No.

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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 2, 2022, the $ 500.0 million principal balance was netted down by $ 9.9 million of remaining debt issuance costs, resulting in a net convertible note payable of $ 490.1 million.

Interest expense related to the 2026 Notes was $ 0.7 million, which is entirely attributable to the amortization of the debt issuance costs.

As of October 1, 2022, the $ 500.0 million principal balance was netted down by $ 9.2 million of remaining debt issuance costs, resulting in a net convertible note payable of $ 490.8 million.

Interest expense related to the 2026 Notes was $ 0.7 million and $ 1.3 million, for the three and six months ended October 1, 2022, respectively, which is entirely attributable to the amortization of the debt issuance costs.

The debt issuance costs are amortized at an effective interest rate of 0.5 %.

Credit Facilities

Interest on the 2018 Credit Facilities is established using LIBOR plus 1.13 % - 1.75 %, depending on the Company’s leverage ratio.

Under the 2018 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 2, 2022, $ 280.0 million was outstanding under the term loan with an effective interest rate of 3.4 %.

There were no borrowings outstanding on the revolving loan.

The Company also has $ 20.9 million of uncommitted operating lines of credit to fund its global operations under which there were no outstanding borrowings as of July 2, 2022.

The Company was in compliance with the leverage and interest coverage ratios specified in the 2018 Credit Facilities as well as all other bank covenants as of July 2, 2022.

On June 15, 2018, the Company entered into a credit agreement with certain lenders that provided for a $ 350.0 million term loan and a $ 350.0 million revolving loan (together with the term loa n, as amended from time to time, the “2018 Credit Facilities”) that were each scheduled to mature on June 15, 2023 with applicable interest rates during the period established using LIBOR plus 1.13 % - 1.75 %, depending on the Company’s leverage ratio.

On July 26, 2022, the Company entered into an amended and restated credit agreement with certain lenders to refinance the 2018 Credit Facilities and extend their maturity date through June 2025.

The amended and restated credit agreement provides for a $ 280 million senior unsecured term loan, the proceeds of which have been used to retire the balance of the term loan under the 2018 Credit Facilities, and a $ 420 million senior unsecured revolving credit facility (together, the “Revised Credit Facilities”).

Loans under the Revised Credit Facilities will initially bear interest at an annual rate equal to the Adjusted Term SOFR Rate (as specified in the amended and restated credit agreement), which is subject to a floor of 0 %, plus an applicable rate ranging from 1.125 % to 1.750 % based on the Company’s consolidated net leverage ratio (as specified in the amended and restated credit agreement) at the applicable measurement date.

The amended and restated credit agreement provides for a $ 280.0 million senior unsecured term loan, the proceeds of which have been used to settle the balance of the term loan under the 2018 Credit Facilities, and a $ 420.0 million senior unsecured revolving credit facility (together, the “Revised Credit Facilities”).

Loans under the Revised Credit Facilities bear interest at an annual rate equal to the Adjusted Term SOFR Rate (as specified in the amended and restated credit agreement), which is subject to a floor of 0 %, plus an applicable rate ranging from 1.125 % to 1.750 % based on the Company’s consolidated net leverage ratio (as specified in the amended and restated credit agreement) at the applicable measurement date.

Adjusted Term SOFR Rate loans are also subject to a credit spread adjustment of 0.10 % per annum.

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The principal amount of the term loan under the Revised Credit Facilities is repayable quarterly through the maturity date at a rate of 2.5 % for the first year and 5 % thereafter, with the unpaid balance due at maturity.

As a result of the Company’s entry into the Revised Credit Facilities, the Company has reclassified short term debt to long term on the condensed consolidated balance sheet accordance with ASC 470.

The Company has required scheduled principal payments of $ 5.3 million during the remainder of fiscal 2023.

The Company applied modification accounting for the credit facility refinancing.

For the term loan under the Revised Credit facilities, for the three and six months ended October 1, 2022, the Company recognized interest expense of $ 0.5 million for third party fees incurred and capitalized $ 0.2 million of lender fees related to the term loan.

For the three and six months ended October 1, 2022, the Company capitalized $ 1.1 million of lender fees and third-party costs incurred in the refinancing related to the revolving credit facility under the Revised Credit Facilities.

At October 1, 2022, $ 278.3 million was outstanding under the term loan with an effective int erest rate of 4.2 %.

The Company has scheduled principal payments of $ 8.8 million required during the 12 months following October 1, 2022.

There was $ 50.0 million outstanding under the revolving credit facility at October 1, 2022.

The Company also has $ 19.6 million of uncommitted operating lines of credit to fund its global operations under which there were no outstanding borrowings as of October 1, 2022.

The Company was in compliance with the leverage and interest coverage ratios specified in the Revised Credit Facilities as well as all other bank covenants as of October 1, 2022.

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The Company manufactures, markets and sells its products globally.

During the three months ended July 2, 2022, 30.4 % of the Company’s sales were generated outside the U.S.

During the three and six months ended October 1, 2022, 28.8 % and 29.6 %, respectively, of the Company’s sales were generated outside the U.S.

in local currencies.

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Designated Foreign Currency Hedge Contracts

All of the Company’s designated foreign currency hedge contracts as of July 2, 2022 and April 2, 2022 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 1, 2022 and April 2, 2022 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 will 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 $ 49.8 million as of July 2, 2022 and $ 67.3 million as of April 2, 2022.

At July 2, 2022, a gain 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 2, 2022 mature within twelve months.

The Company had designated foreign currency hedge contracts outstanding in the contract amount of $ 30.9 million as of October 1, 2022 and $ 67.3 million as of April 2, 2022.

At October 1, 2022, a gain of $ 2.4 million, net of tax, will be reclassified to earnings within the next twelve months.

Substantially all currency cash flow hedges outstanding as of October 1, 2022 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 $ 44.1 million as of July 2, 2022 and $ 39.5 million as of April 2, 2022.

The Company had non-designated foreign currency hedge contracts under ASC 815 outstanding in the contract amount of $ 45.2 million as of October 1, 2022 and $ 39.5 million as of April 2, 2022.

Interest Rate Swaps

On June 15, 2018, the Company entered into the 2018 Credit Facilities, which provided for a $ 350.0 million term loan and a $ 350.0 million revolving credit facility.

Under the terms of the 2018 Credit Facilities, interest is established using LIBOR plus 1.13 % - 1.75 %.

As a result, the Company’s earnings and cash flows are exposed to interest rate risk from changes to LIBOR.

Part of the Company’s interest rate risk management strategy includes the use of interest rate swaps to mitigate its exposure to changes in variable interest rates.

The Company’s objective in using interest rate swaps is to add stability to interest expense and to manage and reduce the risk inherent in interest rate fluctuations.

In August 2018, the Company entered into two interest rate swap agreements (the “Swaps”) to pay an average fixed rate of 2.80 % on a total notional value of $ 241.9 million of debt.

As a result of the Swaps, 70 % of the Term Loan previously exposed to interest rate risk from changes in LIBOR is now fixed at a rate of 4.05 %.

The Swaps mature on June 15, 2023.

As of July 2, 2022 , the notional value was $ 196.0 million.

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 2, 2022, a gain of $ 3.1 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.

On July 26, 2022, the Company entered into an amended and restated credit agreement to refinance the 2018 Credit Facilities and extend the maturity date to June 15, 2025.

The Company is in the process of evaluating additional interest rate swap protection that would extend beyond June 2023.

On June 15, 2018, the Company entered into the 2018 Credit Facilities, which provided for a $ 350.0 million term loan and a $ 350.0 million revolving credit facility.

Under the terms of the 2018 Credit Facilities, interest was established using LIBOR plus the applicable rate ranging from 1.13 % to 1.75 % based on the Company's leverage ratio.

In August 2018, the Company entered into two interest rate swap agreements to pay an average fixed rate of 2.80 % plus the applicable rate on a total notional value of $ 241.9 million of debt, or 70 % of the notional value of the unsecured term loan.

The 2018 interest rate swaps mature on June 15, 2023.

As a result of the refinancing in August 2022, the 2018 interest rate swaps were amended in September 2022 to align with the Term Secured Overnight Financing Rate (“SOFR”) rate rather than LIBOR (the “Amended Swaps”).

The Company concluded that the Amended Swaps were still effective such that hedge accounting was continued on these swaps.

On July 26, 2022, the Company entered into an amended and restated credit agreement to refinance the 2018 Credit Facilities and extend their maturity date through June 2025.

The Revised Credit Facilities include a $ 280.0 million senior unsecured term loan and a $ 420.0 million senior unsecured revolving credit facility.

Loans under the Revised Credit Facilities bear interest at an annual rate equal to the 1-month USD Term SOFR plus 0.10 % and an applicable rate ranging from 1.125 % to 1.750 % based on the Company’s consolidated net leverage ratio.

In September 2022, the Company entered into four additional interest rate swaps, which when combined with the Amended Swaps, result in an average blended fixed interest rate of 3.57 % plus the applicable rate on 70 % of the notional value of the unsecured term loan until mid-June 2023 and 4.12 % plus the applicable rate thereafter on 80 % of the notional until the maturity date in June 2025.

The Company has concluded that each of these four additional interest rate swaps are effective and qualify for hedge accounting treatment.

The Company held the following interest rate swaps as of October 1, 2022:

Hedged Item Original Notional Amount Notional Amount as of October 1, 2022 Designation Date Effective Date Termination Date Fixed Interest Rate Estimated Fair Value Assets (Liabilities)

(In thousands)

1-month USD Term SOFR $ 140,719 $ 85,500 9/23/2022 9/30/2022 6/15/2023 2.67 % $ 502

1-month USD Term SOFR 101,219 61,500 9/23/2022 9/30/2022 6/15/2023 2.76 % 348

1-month USD Term SOFR 23,888 23,888 9/23/2022 9/30/2022 6/15/2023 4.44 % ( 78 )

1-month USD Term SOFR 23,888 23,888 9/23/2022 9/30/2022 6/15/2023 4.46 % ( 82 )

1-month USD Term SOFR 109,900 — 9/23/2022 6/15/2023 6/15/2025 4.08 % ( 237 )

1-month USD Term SOFR 109,900 — 9/23/2022 6/15/2023 6/15/2025 4.15 % ( 315 )

Total $ 509,514 $ 194,776 $ 138

For the six months ended October 1, 2022, 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

3 unchanged sentences

To date, the Company has not experienced significant customer payment defaults, or identified other significant collectability concerns.

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

Three Months Ended

(In thousands) July 2, 2022 July 3, 2021

The following is a roll forward of the allowance for credit losses:

Three Months Ended Six Months Ended

(In thousands) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Beginning balance $ 2,495 $ 2,236 $ 2,475 $ 2,226

Credit (gain) loss 146 27

Credit loss 59 504 204 532

Write-offs ( 59 ) ( 39 ) ( 184 ) ( 57 )

1 unchanged sentence

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 Income and Comprehensive Income for the three months ended July 2, 2022:

(In thousands) Amount of Gain Recognized

9 unchanged sentences

Designated interest rate swaps, net of tax $ 2,190 $ ( 1,030 ) Interest and other expense, net $ —

The Company did not have fair value hedges or net investment hedges outstanding as of July 2, 2022 or April 2, 2022.

As of July 2, 2022, no material deferred taxes were recognized for designated foreign currency hedges.

The Company did not have fair value hedges or net investment hedges outstanding as of October 1, 2022 or April 2, 2022.

As of October 1, 2022, no material deferred taxes 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.

5 unchanged sentences

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

As of July 2, 2022, 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 2, 2022 and April 2, 2022:

As of October 1, 2022, 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 1, 2022 and April 2, 2022:

(In thousands) Location in Condensed Consolidated

Balance Sheets As of As of

July 2, 2022 April 2, 2022

October 1, 2022 April 2, 2022

Derivative Assets:

7 unchanged sentences

Designated interest rate swaps Other current liabilities 160 1,813

Designated interest rate swaps Other long-term liabilities 815 —

$ 1,542 $ 1,894

7 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 July 2, 2022 and April 2, 2022.

As of July 2, 2022

Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of October 1, 2022 and April 2, 2022.

As of October 1, 2022

(In thousands) Level 1 Level 2 Level 3 Total

6 unchanged sentences

Non-designated foreign currency hedge contracts — 271 — 271

Designated interest rate swaps — 975 — 975

Contingent consideration — — 779 779

19 unchanged sentences

Fair Value at Valuation Unobservable

(In thousands) July 2, 2022 Technique Input Range

(In thousands) October 1, 2022 Technique Input Range

Revenue-based payments $ 779 Discounted cash flow Discount rate 8.5 %

Projected year of payment 2022 - 2023

The fair value of contingent consideration associated with acquisitions was $ 0.9 million at July 2, 2022 and was included in other liabilities.

The fair value of contingent consideration associated with acquisitions was $ 0.8 million at October 1, 2022 and was included in other liabilities.

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

4 unchanged sentences

Currency translation ( 99 )

Balance at July 2, 2022 $ 877

Balance at October 1, 2022 $ 779

Other Fair Value Disclosures

The Term Loan, which is carried at amortized cost, accounts receivable and accounts payable approximate fa ir value.

The fair value of the 2026 Notes as of July 2, 2022 was $ 396.1 million, which was determined by using the market price on the last trading day of the reporting period.

The fair value of the 2026 Notes as of October 1, 2022 was $ 399.2 million, which was determined by using the market price on the last trading day of the reporting period.

COMMITMENTS AND CONTINGENCIES

5 unchanged sentences

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.

The subpoena requested 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 has fully cooperated with this inqui ry.

On August 16, 2022, the U.S.

Department of Justice (“DOJ”) filed a motion on behalf of the United States and 31 states reflecting their decision to not intervene in the underlying qui tam action captioned United States ex rel.

Berthelot et al.

Haemonetics Corp., 1:20-cv-11062-ADB, pending in the U.S.

District Court for the District of Massachusetts, indicating that the DOJ had completed its investigative activity based on then available information.

The qui tam case was unsealed by order dated August 18, 2022.

In the fourth quarter of fiscal 2021, a putative class action complaint was filed against the Company in the Circuit Court of Cook County, Illinois by Mary Crumpton, on behalf of herself and similarly situated individuals.

9 unchanged sentences

SEGMENT AND ENTERPRISE-WIDE INFORMATION

The Company determines its reportable segments by first identifying its operating segments, and then by assessing whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component.

management regularly reviews the operating results of that component.

The Company’s reporting structure aligns with its operating structure of three global business units and the information that is regularly reviewed by the Company’s chief operating decision maker.

9 unchanged sentences

Selected information by reportable segment is presented below:

Three Months Ended

(In thousands) July 2,

Three Months Ended Six Months Ended

(In thousands) October 1,

2022 October 2,

2021 October 1,

2022 October 2,

Plasma $ 128,888 $ 82,004 $ 231,930 $ 153,807

2 unchanged sentences

Net revenues by business unit 297,102 233,165 555,901 454,311

5,409 4,951 10,546 10,219

Effect of exchange rates ( 5,026 ) 1,781 ( 7,504 ) 3,895

1 unchanged sentence

(1) Reflects revenue for service, maintenance and parts

Three Months Ended

(In thousands) July 2,

Three Months Ended Six Months Ended

(In thousands) October 1,

2022 October 2,

2021 October 1,

2022 October 2,

Segment operating income

13 unchanged sentences

Litigation-related charges ( 198 ) ( 145 ) ( 394 ) ( 1,083 )

Gains on divestitures and sale of assets — 9,603

Gains on divestiture 382 — 382 9,603

Operating income $ 46,732 $ 24,510 $ 77,499 $ 25,900

5 unchanged sentences

Net revenues by product line are as follows:

Three Months Ended

(In thousands) July 2,

Three Months Ended Six Months Ended

(In thousands) October 1,

2022 October 2,

2021 October 1,

2022 October 2,

Plasma products and services $ 143,161 $ 102,075 $ 261,513 $ 192,584

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 2,

Three Months Ended Six Months Ended

(In thousands) October 1,

2022 October 2,

2021 October 1,

2022 October 2,

United States $ 211,724 $ 152,106 $ 393,720 $ 293,134

13 unchanged sentences

Net current period other comprehensive income (loss) ( 16,986 ) — 2,685 ( 14,301 )

Balance as of July 2, 2022 $ ( 37,489 ) $ 1,619 $ 3,153 $ ( 32,717 )

Balance as of October 1, 2022 $ ( 44,905 ) $ 1,619 $ 3,031 $ ( 40,255 )

(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