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Dollar relative to all other major currencies.
−Removed: As of April 1, 2023, in the event of a 10% strengthening of the U.S.
+Added: As of March 30, 2024, in the event of a 10% strengthening of the U.S.
Dollar, the change in fair value of all forward contracts would result in a $4.4 million increase in the fair value of the forward contracts, whereas a 10% weakening of the U.S.
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Our exposure to changes in interest rates is associated with borrowings under our credit facilities, all of which is variable rate debt.
−Removed: Total outstanding debt under our Revised Credit Facilities as of April 1, 2023 was $274.7 million with an interest rate of 6.3% based on prevailing Term SOFR rates.
+Added: Total outstanding debt under our senior unsecured term loan as of March 30, 2024 was $262.5 million with an effective interest rate of 6.9% based on prevailing Term SOFR rates.
An increase of 100 basis points in Term SOFR rates would result in additional annual interest expense of $0.5 million .
−Removed: In September 2022, we modified our two existing interest rate swaps to align to Term SOFR rather than LIBOR and entered into four additional interest rate swaps to effectively convert $194.8 million of borrowings under our Revised Credit Facilities from a variable rate to a fixed rate.
+Added: In addition, as of March 30, 2024 , there was $50.0 million outstanding on our senior unsecured revolving credit facility with an effective interest rate of 6.8%, also based on prevailing Term SOFR rates.
+Added: As of March 30, 2024 , the notional amount on our two active interest rate swap agreements to effectively convert borrowings under our 2022 Revised Credit Facilities from a variable rate to a fixed rate were $211.4 million .
These interest rate swaps are intended to mitigate the exposure to fluctuations in interest rates and qualify for hedge accounting treatment as cash flow hedges.
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Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheets of Haemonetics Corporation and subsidiaries (the Company) as of April 1, 2023 and April 2, 2022, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended April 1, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 1, 2023 and April 2, 2022, and the results of its operations and its cash flows for each of the three years in the period ended April 1, 2023, in conformity with U.S.
+Added: We have audited the accompanying consolidated balance sheets of Haemonetics Corporation and subsidiaries (the Company) as of March 30, 2024 and April 1, 2023, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended March 30, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 30, 2024 and April 1, 2023, and the results of its operations and its cash flows for each of the three years in the period ended March 30, 2024, in conformity with U.S.
generally accepted accounting principles.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of April 1, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 22, 2023 expressed an unqualified opinion thereon.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 20, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Valuation of goodwill
−Removed: Description of the Matter As discussed in Note 11 to the consolidated financial statements, the Company had approximately $466 million of goodwill allocated among its reporting units as of April 1, 2023.
−Removed: The Company performs its annual quantitative impairment analysis as of the first day of the fourth quarter, and more frequently if the Company believes indicators of impairment exist, utilizing a discounted cash flow income approach in order to value reporting units for the test.
−Removed: Auditing the annual goodwill impairment test was especially complex and judgmental due to the significant estimation required in determining the fair values of certain reporting units.
−Removed: In particular, the fair value estimates involve judgmental assumptions including the amount and timing of expected future cash flows from revenue growth rates, which are affected by expectations about future market or economic conditions and reporting unit specific risk factors.
−Removed: How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s goodwill impairment review process.
−Removed: For example, we tested controls over management's review of the significant inputs and assumptions used in determining the reporting unit fair values.
−Removed: To test the estimated fair value of the Company’s reporting units, we performed audit procedures that included, among others, assessing fair value estimation methodologies, testing the significant assumptions discussed above and the completeness and accuracy of the underlying data used by the Company in its analysis.
−Removed: We compared the significant assumptions used by management to historical financial results of the reporting unit and information generated by external parties.
−Removed: We considered the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions.
−Removed: In addition, we involved our valuation professionals to assist in our evaluation of the significant assumptions used to develop the fair value estimates.
−Removed: We also evaluated the reconciliation of the estimated aggregate fair value of the reporting units to the market capitalization of the Company.
+Added: Business combination
+Added: Description of the Matter As described in Note 3 to the consolidated financial statements, during fiscal year 2024, the Company completed the acquisition of OpSens Inc.
+Added: for a purchase price of $254.5 million.
+Added: The acquisition was accounted for as a business combination.
+Added: The financial statement accounts primarily affected by this transaction were intangible assets and goodwill.
+Added: Auditing the Company’s accounting for the business combination was complex due to the significant estimation required by management to determine the fair value of certain identified intangible assets, which totaled $172 million and principally consisted of developed technology.
+Added: The significant estimation was primarily due to the judgmental nature of the inputs to the valuation model used to measure the fair value of the developed technology intangible asset, as well as the sensitivity of the respective fair value to the underlying significant assumptions.
+Added: The Company used the income approach to measure the fair value of the intangible asset.
+Added: The significant assumptions used to estimate the fair value of the intangible asset included discount rates and certain assumptions that form the basis of the forecasted results, specifically certain revenue growth rates and EBITDA margin.
+Added: When estimating the significant assumptions to be used in the valuation the Company considered current industry information, market and economic trends, historical results of the acquired business, and other relevant factors.
+Added: These significant assumptions are forward-looking and could be affected by future economic and market conditions.
+Added: How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s accounting for the business combination.
+Added: We tested controls over the valuation of intangible assets, including the valuation models and underlying assumptions used to develop such estimates.
+Added: To test the fair value of the acquired intangible assets, our audit procedures included, among others, evaluating the significant assumptions used, and the testing of the completeness and accuracy of underlying data.
+Added: We tested the valuation models used to value the acquired intangible assets.
+Added: Our testing procedures over the significant assumptions included, among others, comparing them to current industry, market and economic trends, historical results of the acquired business and to other relevant factors.
+Added: We also performed sensitivity analyses of the significant assumptions to evaluate the change in the fair value resulting from changes in the assumptions.
+Added: In addition, we involved valuation professionals to assist in our evaluation of the methodology, computations, and certain significant assumptions used by the Company within the valuation.
/s/ Ernst & Young LLP
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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.