UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~September 26, 2020~~July 3, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-14041

HAEMONETICS CORPORATION

(Exact name of registrant as specified in its charter)


Massachusetts		04-2882273
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

125 Summer Street
Boston,	Massachusetts	02110
(Address of principal executive offices)		(Zip Code)

(781) 848-7100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common stock, $.01 par value per share

HAE

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐No x

The number of shares of $0.01 par value common stock outstanding as of ~~November 2, 2020: 50,777,298~~August 9, 2021: 51,029,618

HAEMONETICS CORPORATION

INDEX



			PAGE
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Unaudited Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income - Three Months Ended July 3, 2021 and ~~Six Months Ended September 26,~~June 27, 2020 ~~and September 28, 2019~~			3
Unaudited Condensed Consolidated Balance Sheet - ~~September 26, 2020~~July 3 , 202 1 and Consolidated Balance Sheet - ~~March 28, 2020~~April 3, 2021			4
Unaudited Condensed Consolidated Statements of Stockholders' Equity - Three ~~and Six~~ Months Ended ~~September 26,~~July 3, 2021 and June 27, 2020 ~~and September 28, 2019~~			5
Unaudited Condensed Consolidated Statements of Cash Flows - ~~Six~~Three Months Ended ~~September 26,~~July 3, 2021 and June 27, 2020 ~~and September 28, 2019~~			6
Notes to Unaudited Condensed Consolidated Financial Statements			7

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2022

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk			3132

ITEM 4. Controls and Procedures			32

PART II. OTHER INFORMATION			33

ITEM 1. Legal Proceedings			33

ITEM 1A. Risk Factors			33

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			33

ITEM 3. Defaults upon Senior Securities			34

ITEM 4. Mine Safety Disclosures			34

ITEM 5. Other Information			34

ITEM 6. Exhibits			35

SIGNATURES			36

ITEM 1. FINANCIAL STATEMENTS

HAEMONETICS CORPORATION AND SUBSIDIARIES

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

(Unaudited in thousands, except per share data)

Three Months Ended Six Months Ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Net revenues $ 209,486 $ 252,566 $ 405,063 $ 491,017
Cost of goods sold 103,742 125,566 209,289 248,111
Gross profit 105,744 127,000 195,774 242,906
Operating expenses:
Research and development 6,763 7,422 14,513 14,909
Selling, general and administrative 71,697 77,922 141,234 150,922
Impairment of assets 0 0 1,028 48,721
Gains on divestitures and sale of assets (31,498) (8,083) (31,498) (8,083)
Total operating expenses 46,962 77,261 125,277 206,469
Operating income 58,782 49,739 70,497 36,437
Interest and other expense, net (3,826) (4,651) (7,561) (9,074)
Income before provision for income taxes 54,956 45,088 62,936 27,363
Provision (benefit) for income taxes 6,855 7,602 4,308 (1,644)
Net income $ 48,101 $ 37,486 $ 58,628 $ 29,007
Net income per share - basic $ 0.95 $ 0.74 $ 1.16 $ 0.57
Net income per share - diluted $ 0.94 $ 0.72 $ 1.15 $ 0.56
Weighted average shares outstanding
Basic 50,696 50,791 50,557 50,901
Diluted 51,093 52,046 51,170 52,174
Comprehensive income $ 53,335 $ 35,378 $ 65,291 $ 23,281


	Three Months Ended
	July 3, 2021		June 27, 2020
Net revenues	$	228,528	$	195,577
Cost of goods sold	120,443		105,547
Gross profit	108,085		90,030
Operating expenses:
Research and development	12,701		7,750
Selling, general and administrative	91,218		62,302
Amortization of intangible assets	12,379		8,263
Gains on divestitures and sale of assets	(9,603)		0
Total operating expenses	106,695		78,315
Operating income	1,390		11,715
Interest and other expense, net	(4,398)		(3,735)
(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

Weighted average shares outstanding
Basic	50,939		50,418
Diluted	50,939		51,247

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

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

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited in thousands, except share data)


		September 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	279,169	$	137,311	Cash and cash equivalents	$	173,462	$	192,305
Accounts receivable, less allowance of $2,699 at September 26, 2020 and $3,824 at March 28, 2020		141,533		165,207
Accounts receivable, less allowance of $2,236 at July 3, 2021 and $2,226 at April 3, 2021						Accounts receivable, less allowance of $2,236 at July 3, 2021 and $2,226 at April 3, 2021	132,908		127,555
Inventories, net	Inventories, net	305,224		270,276		Inventories, net	326,500		322,614
Prepaid expenses and other current assets	Prepaid expenses and other current assets	34,353		30,845		Prepaid expenses and other current assets	51,498		51,072
Total current assets	Total current assets	760,279		603,639		Total current assets	684,368		693,546
Property, plant and equipment, net	Property, plant and equipment, net	240,405		253,399		Property, plant and equipment, net	214,782		217,559
Intangible assets, less accumulated amortization of $299,450 at September 26, 2020 and $296,942 at March 28, 2020		127,210		133,106
Intangible assets, less accumulated amortization of $335,060 at July 3, 2021 and $320,640 at April 3, 2021						Intangible assets, less accumulated amortization of $335,060 at July 3, 2021 and $320,640 at April 3, 2021	353,688		365,483
Goodwill	Goodwill	214,594		210,652		Goodwill	466,314		466,444
Deferred tax asset	Deferred tax asset	4,306		3,930		Deferred tax asset	6,197		6,009
Other long-term assets	Other long-term assets	71,380		62,384		Other long-term assets	68,838		70,882
Total assets	Total assets	$	1,418,174	$	1,267,110	Total assets	$	1,794,187	$	1,819,923
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Notes payable and current maturities of long-term debt	Notes payable and current maturities of long-term debt	$	167,001	$	76,980	Notes payable and current maturities of long-term debt	$	17,025	$	17,016
Accounts payable	Accounts payable	49,071		50,730		Accounts payable	49,131		50,293
Accrued payroll and related costs	Accrued payroll and related costs	29,226		49,471		Accrued payroll and related costs	34,372		47,600
Other liabilities	Other liabilities	93,270		97,641		Other liabilities	127,811		138,586
Total current liabilities	Total current liabilities	338,568		274,822		Total current liabilities	228,339		253,495
Long-term debt, net of current maturities	Long-term debt, net of current maturities	297,016		305,513		Long-term debt, net of current maturities	767,345		690,592
Deferred tax liability	Deferred tax liability	10,480		10,562		Deferred tax liability	24,278		43,825
Other long-term liabilities	Other long-term liabilities	104,187		89,104		Other long-term liabilities	97,145		100,341
Total stockholders’ equity	Total stockholders’ equity					Total stockholders’ equity
Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 50,703,343 shares at September 26, 2020 and 50,322,930 shares at March 28, 2020		507		503
Common stock, $0.01 par value; 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						Common stock, $0.01 par value; 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
Additional paid-in capital	Additional paid-in capital	568,748		553,229		Additional paid-in capital	551,108		602,727
Retained earnings	Retained earnings	137,140		78,512		Retained earnings	154,562		157,981
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(38,472)		(45,135)		Accumulated other comprehensive loss	(29,100)		(29,547)
Total stockholders’ equity	Total stockholders’ equity	667,923		587,109		Total stockholders’ equity	677,080		731,670
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,418,174	$	1,267,110	Total liabilities and stockholders’ equity	$	1,794,187	$	1,819,923

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

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited in thousands)


		Common Stock			Additional Paid-in Capital				Retained Earnings			Accumulated Other Comprehensive Loss				Total Stockholders’ Equity				Common Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
		Shares	Par Value								Shares								Par Value
Balance, March 28, 2020		50,323	$	503			$	553,229						$	78,512			$	(45,135)		$	587,109
Balance, April 3, 2021																			Balance, April 3, 2021	50,869			$	509		$	602,727		$	157,981		$	(29,547)		$	731,670
Employee stock purchase plan	Employee stock purchase plan	22	—		2,144				—			—				2,144			Employee stock purchase plan	39			—		2,210			—			—			2,210
Exercise of stock options	Exercise of stock options	28	1		1,192				—			—				1,193			Exercise of stock options	14			0		500			—			—			500

Issuance of restricted stock, net of cancellations	Issuance of restricted stock, net of cancellations	298	3		(3)				—			—				0			Issuance of restricted stock, net of cancellations	91			1		(1)			—			—			0
Cumulative effect of change in accounting standards																			Cumulative effect of change in accounting standards	—			—		(61,156)			1,035			—			(60,121)
Share-based compensation expense	Share-based compensation expense	—	—		6,167				—			—				6,167			Share-based compensation expense	—			—		6,828			—			—			6,828

Net income		—	—		—				10,527			—				10,527
Net loss																			Net loss	—			—		—			(4,454)			—			(4,454)
Other comprehensive income	Other comprehensive income	—	—		—				—			1,429				1,429			Other comprehensive income	—			—		—			—			447			447
Balance, June 27, 2020		50,671	$	507	$	562,729			$	89,039		$	(43,706)			$	608,569

Exercise of stock options		2	0		67				—			—				67

Issuance of restricted stock, net of cancellations		30	0		0				—			—				0
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
Balance, July 3, 2021																			Balance, July 3, 2021	51,013			$	510	$	551,108		$	154,562		$	(29,100)		$	677,080

Common Stock Additional
Paid-in Capital Retained Earnings Accumulated
Other
Comprehensive Loss Total
Stockholders’ Equity
Shares Par Value
Balance, March 30, 2019 51,020 $ 510 $ 536,320 $ 161,418 $ (30,380) $ 667,868
Employee stock purchase plan 25 0 1,830 — — 1,830
Exercise of stock options 85 1 3,634 — — 3,635
Shares repurchased (616) (6) (21,473) (53,521) — (75,000)
Issuance of restricted stock, net of cancellations 257 3 (3) — — 0
Share-based compensation expense — — 4,730 — — 4,730
Net loss — — — (8,479) — (8,479)
Other comprehensive loss — — — — (3,618) (3,618)
Balance, June 29, 2019 50,771 $ 508 $ 525,038 $ 99,418 $ (33,998) $ 590,966
Exercise of stock options 64 1 2,409 — — 2,410
Shares repurchased (360) (4) 1,274 (51,270) — (50,000)
Issuance of restricted stock, net of cancellations 133 1 (1) — — 0
Share-based compensation expense — — 5,000 — — 5,000
Net income — — — 37,486 — 37,486
Other comprehensive loss — — — — (2,108) (2,108)
Balance, September 28, 2019 50,608 $ 506 $ 533,720 $ 85,634 $ (36,106) $ 583,754


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Par Value
Balance, March 28, 2020	50,323	$	503	$	553,229	$	78,512	$	(45,135)	$	587,109
Employee stock purchase plan	22	0		2,144		—		—		2,144
Exercise of stock options	28	1		1,192		—		—		1,193

Issuance of restricted stock, net of cancellations	298	3		(3)		—		—		0

Share-based compensation expense	—	—		6,167		—		—		6,167

Net income	—	—		—		10,527		—		10,527
Other comprehensive income	—	—		—		—		1,429		1,429
Balance, June 27, 2020	50,671	$	507	$	562,729	$	89,039	$	(43,706)	$	608,569

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

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited in thousands)


		Six Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019			July 3, 2021		June 27, 2020
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income		$	58,628	$	29,007
Net (loss) income						Net (loss) income	$	(4,454)	$	10,527
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash items:	Non-cash items:					Non-cash items:
Depreciation and amortization	Depreciation and amortization	41,603		54,469		Depreciation and amortization	25,033		20,724
Amortization of fair value inventory step-up						Amortization of fair value inventory step-up	5,295		0
Impairment of assets	Impairment of assets	1,028		48,721		Impairment of assets	5,144		1,028
Share-based compensation expense	Share-based compensation expense	12,119		9,730		Share-based compensation expense	6,828		6,167
Deferred tax benefit		(3,031)		(7,290)
Provision for losses on accounts receivable and inventory		1,057		(1,857)
Amortization of deferred finance costs						Amortization of deferred finance costs	1,019		147
(Benefit) provision for losses on inventory						(Benefit) provision for losses on inventory	(544)		1,452
Gains on divestitures and sale of assets	Gains on divestitures and sale of assets	(31,498)		(8,083)		Gains on divestitures and sale of assets	(9,603)		0
Contingent consideration expense						Contingent consideration expense	9,774		0
Other non-cash operating activities	Other non-cash operating activities	362		140		Other non-cash operating activities	(355)		(841)
Change in operating assets and liabilities:	Change in operating assets and liabilities:					Change in operating assets and liabilities:
Change in accounts receivable	Change in accounts receivable	22,391		7,806		Change in accounts receivable	(5,342)		25,067
Change in inventories	Change in inventories	(38,189)		(59,439)		Change in inventories	(8,553)		(24,557)
Change in prepaid income taxes	Change in prepaid income taxes	(635)		(1,588)		Change in prepaid income taxes	2,121		(3,544)
Change in other assets and other liabilities	Change in other assets and other liabilities	1,902		(10,616)		Change in other assets and other liabilities	1,256		865
Change in accounts payable and accrued expenses	Change in accounts payable and accrued expenses	(24,770)		(28,471)		Change in accounts payable and accrued expenses	(29,299)		(25,223)
Net cash provided by operating activities		40,967		32,529
Net cash (used in) provided by operating activities						Net cash (used in) provided by operating activities	(1,680)		11,812
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Capital expenditures	Capital expenditures	(16,035)		(17,722)		Capital expenditures	(13,919)		(7,696)
Acquisition	Acquisition	(16,606)		0		Acquisition	(2,500)		(16,606)
Proceeds from divestitures	Proceeds from divestitures	44,978		9,808		Proceeds from divestitures	0		0
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	902		15,739		Proceeds from sale of property, plant and equipment	568		406
Net cash provided by investing activities		13,239		7,825
Net cash used in investing activities						Net cash used in investing activities	(15,851)		(23,896)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Net increase in short-term loans	Net increase in short-term loans	90,000		25,000		Net increase in short-term loans	0		150,000
Repayment of term loan borrowings	Repayment of term loan borrowings	(8,750)		(4,375)		Repayment of term loan borrowings	(4,375)		(4,375)
Share repurchases		0		(125,000)
Proceeds from employee stock purchase plan	Proceeds from employee stock purchase plan	2,144		1,830		Proceeds from employee stock purchase plan	2,210		2,144
Proceeds from exercise of stock options	Proceeds from exercise of stock options	1,259		6,046		Proceeds from exercise of stock options	500		1,193
Other	Other	(20)		72		Other	31		(11)
Net cash provided by (used in) financing activities		84,633		(96,427)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(1,634)		148,951
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	3,019		(1,248)		Effect of exchange rates on cash and cash equivalents	322		1,547
Net Change in Cash and Cash Equivalents	Net Change in Cash and Cash Equivalents	141,858		(57,321)		Net Change in Cash and Cash Equivalents	(18,843)		138,414
Cash and Cash Equivalents at Beginning of Period	Cash and Cash Equivalents at Beginning of Period	137,311		169,351		Cash and Cash Equivalents at Beginning of Period	192,305		137,311
Cash and Cash Equivalents at End of Period	Cash and Cash Equivalents at End of Period	$	279,169	$	112,030	Cash and Cash Equivalents at End of Period	$	173,462	$	275,725
Supplemental Disclosures of Cash Flow Information:	Supplemental Disclosures of Cash Flow Information:					Supplemental Disclosures of Cash Flow Information:
Interest paid	Interest paid	$	4,637	$	6,260	Interest paid	$	1,482	$	2,780
Income taxes paid	Income taxes paid	$	4,099	$	8,535	Income taxes paid	$	14,494	$	2,063
Non-Cash Investing and Financing Activities:	Non-Cash Investing and Financing Activities:					Non-Cash Investing and Financing Activities:
Transfers from inventory to fixed assets for placement of Haemonetics equipment	Transfers from inventory to fixed assets for placement of Haemonetics equipment	$	4,203	$	5,780	Transfers from inventory to fixed assets for placement of Haemonetics equipment	$	3,203	$	2,364

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

HAEMONETICS CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Haemonetics Corporation ~~("Haemonetics"~~(“Haemonetics” or the ~~"Company"~~“Company”) presented herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company's management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. All intercompany transactions have been eliminated. Operating results for the ~~six~~three months ended ~~September 26, 2020~~July 3, 2021 are not necessarily indicative of the results that may be expected for the full fiscal year ending April ~~3, 2021~~2, 2022 or any other interim period. The Company has assessed its ability to continue as a going concern. As of ~~September 26, 2020,~~July 3, 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~~Annual Report on Form 10-K for the fiscal year ended ~~March 28, 2020.~~April 3, 2021.

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. ~~Refer to Note 11,~~ ~~Notes Payable and Long-term Debt, for information pertaining to a payment made on the Company's revolving credit facility that occurred subsequent to September 26, 2020.~~Subsequent events have been evaluated as required. There were no ~~other~~ material recognized or unrecognized subsequent events as of or for the ~~six~~three months ended ~~September 26, 2020.~~July 3, 2021.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Standards Implemented

In ~~June 2016,~~December 2019, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued Accounting Standards Codification ~~("ASC"~~(“ASC”) Update No. ~~2016-13,~~ ~~Financial Instruments – Credit Losses~~2019-12, Income Taxes (Topic ~~326)~~740). ~~ASC Update No. 2016-13 is intended~~The new guidance improves consistent application of and simplifies the accounting for income taxes by removing certain exceptions to ~~replace~~ the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates.general principals in Topic 740. The Company adopted ASC Update No. ~~2016-13 during the first quarter of fiscal~~2019-12 effective April 4, 2021. The adoption did not have a material impact on the ~~Company's unaudited condensed consolidated~~ financial ~~statements.~~position or results of operations.

In August ~~2018,~~2020, the FASB issued ASC ASU Update No. ~~2018-15,~~ ~~Intangibles, Goodwill~~2020-06 Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - ~~Internal-Use Software~~ ~~(Subtopic 350-40)~~Contracts in Entity's Own Equity (Subtopic 815-40). The ~~new guidance aligns~~amendments simplify the ~~accounting implementation costs incurred in a cloud computing arrangement that~~complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. Update No. 2020-06 is ~~a service contract with the accounting~~effective for ~~internal-use software licenses.~~fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company early adopted ASC Update No. ~~2018-15 during~~2020-06 effective April 4, 2021 using the ~~first quarter~~modified retrospective method, which resulted in a decrease of ~~fiscal 2021. The adoption did not~~$61.2 million to additional paid-in capital, a decrease to non-current deferred tax liabilities of $20.0 million, and an increase of $80.3 million to non-current convertible notes, net, on the Condensed Consolidated Balance Sheets. Additionally, retained earnings was adjusted to remove amortization expense recognized in prior periods related to the debt discount and the convertible notes no longer have a ~~material~~debt discount that will be amortized, net of taxes. The impact to retained earnings on the ~~Company's unaudited condensed consolidated financial statements.~~Condensed Consolidated Balance Sheets as of April 4, 2021 is an increase of $1.0 million.

3. RESTRUCTURING

On an ongoing basis, the Company reviews the global economy, the healthcare industry, and the markets in which it competes to identify opportunities for efficiencies, enhance commercial capabilities, align its resources and offer its customers better solutions. In order to realize these opportunities, the Company undertakes restructuring-type activities to transform its business.

In July 2019, the Board of Directors of the Company approved ~~a new~~the Operational Excellence Program (the ~~"2020 Program"~~“2020 Program”) and delegated authority to the Company's management to determine the detail of the initiatives that will comprise the program. ~~The 2020 Program is designed~~During the first quarter of fiscal 2022, the Company revised the program to improve ~~operational performance~~product and service quality, reduce cost principally in ~~our~~its manufacturing and supply chain ~~operations.~~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 ~~estimates that it will~~now expects to incur aggregate charges between ~~$60~~$95 million and ~~$70~~$105 million ~~in connection with~~by the ~~2020 Program. These charges, the~~end of fiscal 2025. The majority of ~~which~~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 and are expected to be substantially completed by the end of fiscal 2023.~~approved. During the three ~~and six~~ months ended ~~September 26,~~July 3, 2021 and June 27, 2020, the Company incurred ~~$4.4~~$9.9 million and ~~$8.0~~$3.5 million, respectively, of restructuring and ~~turnaround costs under this program. During both the three and six months ended September 28, 2019, the Company incurred $2.9 million of~~ restructuring ~~and turnaround~~related costs under this program. Total cumulative charges under this program are ~~$19.8~~$36.9 million.

During fiscal 2018, the Company launched a Complexity Reduction Initiative (the "2018 Program"), a company-wide restructuring program designed to improve operational performance and reduce cost, freeing up resources to invest in accelerated growth. During the three months ended September 26, 2020, the Company incurred minimal charges of restructuring and turnaround costs under this program. During the six months ended September 26, 2020, the Company incurred $0.5 million of restructuring and turnaround costs under this program. During the three and six months ended September 28, 2019, the Company incurred $0.9 million and $2.9 million, respectively, of restructuring and turnaround costs under this program. Total cumulative charges under this program are $58.7 million. The 2018 Program is substantially complete.

The following table summarizes the activity for restructuring reserves related to the 2020 Program and ~~the 2018 Program and~~ prior programs for the ~~six~~three months ended ~~September 26, 2020,~~July 3, 2021, substantially all of which relates to employee severance and other employee costs:


(In thousands)	(In thousands)	2020 Program		2018 Program and Prior Programs		Total		(In thousands)	2020 Program		Prior Programs		Total
Balance at March 28, 2020		$	1,136	$	1,512	$	2,648
Balance at April 3, 2021								Balance at April 3, 2021	$	575	$	437	$	1,012
Costs incurred, net of reversals	Costs incurred, net of reversals	1,100		(108)		992		Costs incurred, net of reversals	3,391		29		3,420
Payments	Payments	(1,145)		(815)		(1,960)		Payments	(63)		0		(63)

Balance at September 26, 2020		$	1,091	$	589	$	1,680
Non-cash adjustments								Non-cash adjustments	0		11		11
Balance at July 3, 2021								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~~Condensed Consolidated Statements of ~~income~~(Loss) Income and ~~comprehensive income:~~Comprehensive (Loss) Income:


		Three Months Ended				Six Months Ended					Three Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	July 3, 2021		June 27, 2020
Cost of goods sold	Cost of goods sold	$	(236)	$	283	$	267	$	442	Cost of goods sold	$	2,253	$	503
Research and development	Research and development	(209)		555		110		569		Research and development	105		319
Selling, general and administrative expenses	Selling, general and administrative expenses	372		505		615		1,301		Selling, general and administrative expenses	1,062		243
		$	(73)	$	1,343	$	992	$	2,312		$	3,420	$	1,065

As of ~~September 26, 2020,~~July 3, 2021, the Company had a restructuring liability of ~~$1.7~~$4.4 million, of which ~~$1.2~~$3.9 million is payable within the next twelve months.

In addition to the restructuring costs included in the table above, the Company also incurred costs that do not constitute restructuring under ASC 420, Exit and Disposal Cost Obligations, and which the Company instead refers to as ~~turnaround~~restructuring related costs. These costs consist primarily of expenditures directly related to the restructuring actions and include program management costs associated with the ~~2020 Program~~implementation of outsourcing initiatives and ~~operational performance improvement initiatives.~~

recent accounting standards.

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


Restructuring costs	Restructuring costs	Three Months Ended				Six Months Ended				Restructuring costs	Three Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	July 3, 2021		June 27, 2020
Plasma	Plasma	$	(87)	$	395	$	481	$	548	Plasma	$	2,288	$	568
Blood Center	Blood Center	20		94		174		136		Blood Center	3		154
Hospital	Hospital	(147)		34		(18)		237		Hospital	(38)		129
Corporate	Corporate	141		820		355		1,391		Corporate	1,167		214
Total	Total	$	(73)	$	1,343	$	992	$	2,312	Total	$	3,420	$	1,065

Turnaround costs		Three Months Ended				Six Months Ended
Restructuring related costs										Restructuring related costs	Three Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	July 3, 2021		June 27, 2020
Plasma	Plasma	$	804	$	31	$	804	$	79	Plasma	$	1,738	$	0
Blood Center	Blood Center	490		0		506		0		Blood Center	490		16
Hospital	Hospital	1		0		10		0		Hospital	133		9
Corporate	Corporate	3,218		2,383		6,128		3,393		Corporate	4,274		2,910
Total	Total	$	4,513	$	2,414	$	7,448	$	3,472	Total	$	6,635	$	2,935

Total restructuring and turnaround costs		$	4,440	$	3,757	$	8,440	$	5,784
Total restructuring and restructuring related costs										Total restructuring and restructuring related costs	$	10,055	$	4,000

4. ~~ACQUISITION~~ACQUISITIONS

On January 17, 2021, the Company entered into an Agreement and Plan of Merger with Cardiva Medical, Inc. (“Cardiva”), an industry-leading manufacturer of vascular closure systems based in Santa Clara, California. In connection with this acquisition, which closed on March 1, 2021, the Company acquired 100% of the issued and outstanding shares of capital stock of Cardiva for total consideration of $489.8 million, which consisted of upfront payments in the aggregate of $465.5 million ($418.2 million net of cash acquired) and the fair value of contingent consideration of $24.3 million. The contingent consideration, which could total a maximum of $35.0 million is payable over the next two years based on sales growth. The Company financed the acquisition through a combination of cash, borrowings under its revolving credit facility and an additional $150.0 million term loan under the existing credit facility.

Cardiva’s portfolio includes two catheter-based vascular access site closure devices. The VASCADE® vascular closure system is designed for “small-bore” femoral arterial and venous closure, generally used in interventional cardiology and peripheral vascular procedures. The VASCADE MVP® vascular closure system is designed for “mid-bore” multi-access femoral venous closure, generally used in electrophysiology procedures, and is the only U.S. Food and Drug Administration (“FDA”) approved closure device for use following cardiac ablation procedures requiring two or more access sites within the same vessel. The addition of the VASCADE portfolio to the Hospital business unit includes products with demonstrated benefits and enhances penetration into the large and growing interventional cardiology and electrophysiology markets.

Purchase Price Allocation

The Company accounted for the acquisition as a business combination, and in accordance with FASB ASC Topic 805, Business Combinations (Topic 805), recorded the assets acquired and liabilities assumed at their fair values as of the acquisition date. The fair value of assets acquired and liabilities assumed have been recognized based on management’s estimates and assumptions using the information regarding facts and circumstances that existed at the closing date. 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. Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. The finalization of the Company’s purchase accounting assessment could result in changes in the valuation of assets acquired and liabilities assumed, which could be material. 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.

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:


(In thousands)	March 1, 2021
Accounts receivable	$	7,304
Inventories	18,765
Prepaid expenses and other current assets	850
Property, plant and equipment	1,186
Intangible assets	253,929
Goodwill	251,407
Other long-term assets	1,868
Total assets acquired	$	535,309
Accounts payable	3,292
Accrued payroll and related costs	58,211
Other liabilities	1,853
Deferred tax liability	27,912
Other long-term liabilities	1,772
Total liabilities assumed	$	93,040
Net assets acquired	$	442,269

The Company determined the identifiable intangible assets were completed technology, customer relationships and trademarks. 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. Customer relationships were valued using the distributor method. Trademarks were valued using the relief from royalty method. The cash flows used in the valuation of the intangible assets were based on estimates used to price the transaction. 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.

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

Intangible assets acquired consist of the following:


(In thousands)	Amount		Weighted-Average Amortization Period	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Completed technology	$	230,326	13 years	13.5	%
Customer relationships	18,166		12 years	13.0	%
Trademarks	5,437		13 years	13.5	%
Total	$	253,929

The Company recorded a long-term deferred tax liability, net, of $27.9 million primarily related to definite-lived intangible assets which cannot be deducted for tax purposes, partially offset by deferred tax assets primarily related to net operating losses acquired.

Acquisition-Related Costs

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

In January 2021, the Company entered into an agreement to acquire certain intellectual property owned by HemoAssay Science and Technology (Suzhou) Co. Ltd., a China-incorporated company, and its affiliates (collectively, “HemoAssay”) underlying their HAS viscoelastic diagnostic devices, related assays and disposables. The Company previously entered into exclusive manufacturing and distribution agreements with HemoAssay pursuant to which it has exclusive rights to commercialize HemoAssay’s HAS devices in China. In connection with the transaction, the Company has agreed to pay up to $15.0 million to HemoAssay in contingent consideration based on certain developmental and manufacturing based milestones. 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. These products augment the Company's portfolio of hemostasis analyzers within the Hospital business unit.

enicor GmbH

On April 1, 2020, the Company acquired all of the outstanding equity of enicor GmbH ~~("enicor"~~(“enicor”), the manufacturer of ClotPro®, a new generation whole blood coagulation testing system that is currently available in select European and Asia Pacific markets, for total consideration of $20.5 million, which consisted of upfront payments of $16.6 million and the fair value of contingent consideration of $3.9 million. The contingent consideration, which could total a maximum of $4.5 million, consists of payments related to the achievement of certain revenue and regulatory milestones. The acquisition of this viscoelastic diagnostic device augments the Company's portfolio of hemostasis analyzers within the Hospital business unit.

Purchase Price Allocation

The Company accounted for the acquisition of enicor as a business combination, and in accordance with FASB ASC Topic 805, Business Combinations (Topic 805), recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The final determination of the fair value of certain assets and liabilities will be completed within the measurement period as required by Topic 805. As of September 26, 2020, the valuation studies necessary to determine the fair market value of the assets acquired and liabilities assumed are preliminary, including the projection of the underlying cash flows used to determine the fair value of the identified tangible, intangible and financial assets and liabilities.

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


(In thousands)	~~September 26,~~April 1, 2020

Inventory	$	634
Other current assets	685
Property, plant and equipment	289
Intangible assets	14,090
Goodwill	8,153
Total assets acquired	$	23,851
Other current liabilities	289
~~Contingent consideration (current)~~	~~504~~
~~Contingent consideration (non-current)~~	~~3,416~~
Deferred tax liability	3,036
Total liabilities assumed	$	~~7,245~~3,325
Net assets acquired	$	~~16,606~~20,526

The Company determined the identifiable intangible assets were completed technology, customer relationships and a trademark. The fair value of the intangible assets was estimated using the income approach, and the cash flow projections were discounted using a rate of 20%. The cash flows were based on estimates used to price the transaction, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital. The benefits of adding a viscoelastic diagnostic device to the Company’s portfolio of hemostasis analyzers within the Hospital business unit contributed to an acquisition price in excess of the fair value of net assets acquired for enicor, which resulted in the establishment of goodwill. In addition, the benefits of lower cost manufacturing and complementary sales channels also contributed to the establishment of goodwill for this acquisition. None of the goodwill is expected to be deductible for income tax purposes.

Intangible assets acquired consist of the following:


(In thousands)	(In thousands)	Amount		Weighted-Average Amortization Period	(In thousands)	Amount		Weighted-Average Amortization Period	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Completed technology	Completed technology	$	13,441	10	Completed technology	$	13,441	10 Years	20	%
Customer relationships	Customer relationships	347		10	Customer relationships	347		10 Years	20	%
Trademark	Trademark	302		10	Trademark	302		10 Years	20	%
Total	Total	$	14,090	10	Total	$	14,090

Acquisition-Related Costs

The amount of acquisition-related costs incurred associated with the acquisition was $0.2 million for the three ~~and six~~ months ended ~~September 26,~~June 27, 2020.

~~Unaudited Pro Forma Financial Information~~

Enicor had an immaterial impact to the Company's net revenues and net income for the period post acquisition through September 26, 2020. The unaudited estimated pro forma impact of the results of the acquisition of enicor as if it was consummated on March 29, 2020 are immaterial.

5. DIVESTITURES

Fajardo, Puerto Rico Manufacturing Operations

On June 29, 2020, the Company sold its Fajardo, Puerto Rico, manufacturing operations to GVS, S.p.A ~~("GVS"~~(“GVS”), a leading provider of advanced filtration solutions for critical applications for ~~$15.5~~$15.1 million ($~~8.1~~7.8 million, net of cash transferred). Under the terms of the agreement, Haemonetics retained all intellectual property rights to its proprietary blood filters currently manufactured at its Fajardo facility and GVS acquired certain assets consisting primarily of property, plant and equipment, inventory and cash and has assumed certain related liabilities. In connection with this transaction, the Company and GVS also entered into a long-term supply and development agreement that, among other things, grants GVS exclusive rights to manufacture and supply the blood filters currently produced at the Fajardo facility for Haemonetics. The Company also agreed to provide certain transition services to GVS, generally for a period of up to three months depending on the nature of the service.

As a result of this transaction, Haemonetics recognized a pre-tax impairment charge in its Blood Center business unit of $1.0 million in the first quarter of fiscal 2021 ~~within~~and an incremental loss of $0.4 million based on closing adjustments during the ~~Blood Center business unit,~~third quarter of fiscal 2021, as the carrying value of the assets and liabilities in the asset transfer exceeded the net of the ~~$15.5~~$15.1 million of cash proceeds and an additional contingent liability of $1.5 million. The disposal group consisted of $3.3 million of inventory, $7.2 million of fixed assets, ~~$3.1~~$3.2 million of other liabilities, and $0.4 million of goodwill allocated based on fair value to the business.

U.S. Blood Donor Management Software

On July 1, 2020, the Company sold certain U.S. blood donor management software solution assets within its Blood Center business unit to the GPI Group ~~("GPI"~~(“GPI”) for an upfront cash payment of $14.0 million ($13.6 million, net of working capital adjustments) and up to $14.0 million in additional consideration contingent on the achievement of commercial milestones over the twelve month period immediately following the closing of the transaction. The disposal group consisted of $1.4 million of accounts receivable, $0.9 million of intangible assets, other liabilities of $1.8 million and $1.4 million of goodwill allocated based on fair value to the business. The Company recognized ~~an $11.7~~a gain of $13.2 million ~~gain upon closing of~~associated with the transaction in fiscal 2021. During the ~~second quarter~~three months ended July 3, 2021, the Company recognized an additional gain of ~~fiscal 2021 and to the extent the additional~~$9.6 million for contingent consideration is earned and realized in a future period then such amounts will be recorded as additional gains in such future period. The Company also agreed to provide certain transition services to GPI, generally for a period of one to nine months depending on the nature of the service.earned.

Inlog Holdings France

On September 18, 2020, the Company sold its wholly-owned subsidiary Inlog Holdings France SAS to Abénex Capital ("(“Abé~~nex"~~nex”), a private equity firm based in France for $30.5 million ($24.5 million, net of cash transferred)~~, of which $29.2 million was received at closing and $1.3 million will be received one-year from the closing date.~~. Inlog Holdings France SAS, through its subsidiary In Log SAS, develops and sells blood bank and hospital software solutions used predominantly in France and in several other countries outside of the U.S. The disposal group included $2.2 million of intangible assets, $2.2 million of accounts receivable, $0.3 million of other assets, $3.3 million of liabilities and $3.3 million of goodwill allocated based on the fair value of the business which impacted both the Blood Center and Hospital business units. The Company recognized a gain of ~~$19.8~~$20.0 million upon closing of the transaction in the second quarter of fiscal 2021.

6. INCOME TAXES

The Company conducts business globally and reports its results of operations in a number of foreign jurisdictions in addition to the United States. The Company's reported tax rate is impacted by the jurisdictional mix of earnings in any given period as the foreign jurisdictions in which it operates have tax rates that differ from the U.S. statutory tax rate.

For the three ~~and six~~ months ended ~~September 26, 2020,~~July 3, 2021, the Company reported income tax expense of ~~$6.9~~$1.4 million ~~and $4.3 million, respectively,~~ representing an effective tax ~~rates~~rate of ~~12.5% and 6.8%, respectively.~~(48.1)%. The effective tax rate for the three ~~and six~~ months ended ~~September 26,~~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 ~~$0.1 million and $4.1 million, respectively.~~$4.0 million. The effective tax ~~rates were~~rate was also impacted by the jurisdictional mix of ~~earnings including divestiture transactions.~~earnings. During the three ~~and six~~ months ended ~~September 26,~~June 27, 2020, the Company ~~sold~~transferred certain intangible assets amongst its wholly-owned subsidiaries prior to the divestiture of its Fajardo, Puerto Rico manufacturing ~~operations, certain U.S. blood donor management software solution assets, and its wholly-owned subsidiary Inlog Holdings France SAS.~~operations. The tax expense on ~~divestitures, including~~the intercompany sale and establishment of deferred tax assets (including the associated valuation allowance ~~impacts, were~~impacts) was included in the computation of the annual effective tax rate. ~~Refer to Note 5,~~ ~~Divestitures, for information pertaining to these divestitures.~~

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

for the six months ended September 28, 2019 was lower than the U.S. statutory tax rate primarily due to a discrete tax benefit recognized from excess stock compensation deductions of $4.4 million and $9.3 million, respectively. The effective tax rates were also impacted by the jurisdictional mix of earnings and the impact of the divestiture of the Union, South Carolina facility.

7. 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				Six Months Ended					Three Months Ended
(In thousands, except per share amounts)	(In thousands, except per share amounts)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands, except per share amounts)	July 3, 2021		June 27, 2020
Basic EPS	Basic EPS									Basic EPS
Net income		$	48,101	$	37,486	$	58,628	$	29,007
Net (loss) income										Net (loss) income	$	(4,454)	$	10,527
Weighted average shares	Weighted average shares	50,696		50,791		50,557		50,901		Weighted average shares	50,939		50,418
Basic income per share	Basic income per share	$	0.95	$	0.74	$	1.16	$	0.57	Basic income per share	$	(0.09)	$	0.21
Diluted EPS	Diluted EPS									Diluted EPS
Net income		$	48,101	$	37,486	$	58,628	$	29,007
Net (loss) income										Net (loss) income	$	(4,454)	$	10,527
Basic weighted average shares	Basic weighted average shares	50,696		50,791		50,557		50,901		Basic weighted average shares	50,939		50,418
Net effect of common stock equivalents	Net effect of common stock equivalents	397		1,255		613		1,273		Net effect of common stock equivalents	0		829
Diluted weighted average shares	Diluted weighted average shares	51,093		52,046		51,170		52,174		Diluted weighted average shares	50,939		51,247
Diluted income per share	Diluted income per share	$	0.94	$	0.72	$	1.15	$	0.56	Diluted income per share	$	(0.09)	$	0.21

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 ~~and six~~ months ended ~~September 26,~~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 ~~0.8 million and 0.6~~0.5 million anti-dilutive shares, respectively. For the three and six months ended September 28, 2019, weighted average shares outstanding, assuming dilution, excludes the impact of 12,421 shares and 0.2 million anti-dilutive shares, respectively.shares.

8. REVENUE

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. Revenue is recognized when obligations under the terms of a contract with a customer are satisfied; this occurs with the transfer of control of the Company’s goods or services. The Company considers revenue to be earned when all of the following criteria are met: it has a contract with a customer that creates enforceable rights and obligations; promised products or services are identified; the transaction price, or the consideration it expects to receive for transferring goods or providing services, is determinable and it has transferred control of the promised items to the customer. A promise in a contract to transfer a distinct good or service to the customer is identified as a performance obligation. A contract’s transaction price is allocated to each performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Some of the Company’s contracts have multiple performance obligations. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on the estimated standalone selling prices of the good or service in the contract. For goods or services for which observable standalone selling prices are not available, the Company uses an expected cost plus a margin approach to estimate the standalone selling price of each performance obligation.

As of ~~September 26, 2020,~~July 3, 2021, the Company had ~~$19.1~~$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. The Company expects to recognize approximately ~~61%~~69% of this amount as revenue within the next twelve months and the remaining balance thereafter.

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the ~~condensed consolidated balance sheets.~~Condensed Consolidated Balance Sheets. The difference in timing between billing and revenue recognition primarily occurs in software licensing arrangements, resulting in contract assets and contract liabilities.

As of ~~September 26, 2020~~July 3, 2021 and ~~March 28, 2020,~~April 3, 2021, the Company had contract assets of ~~$6.7~~$4.8 million and ~~$5.0~~$4.8 million, respectively. ~~The change is primarily due to the delay in billings compared to the revenue recognized.~~ Contract assets are classified as other current assets and other long-term assets on the ~~condensed consolidated balance sheets.~~Condensed Consolidated Balance Sheets.

As of ~~September 26, 2020~~July 3, 2021 and ~~March 28, 2020,~~April 3, 2021, the Company had contract liabilities of ~~$17.5~~$24.2 million and ~~$20.8~~$20.9 million, respectively. During the three ~~and six~~ months ended ~~September 26, 2020,~~July 3, 2021, the Company recognized ~~$4.8~~$8.6 million ~~and $13.7 million, respectively,~~ of revenue that was included in the above ~~March 28, 2020~~April 3, 2021 contract liability balance. Contract liabilities decreased by an additional $2.5 million during the three and six months ended September 26, 2020 as a result of the sale of certain U.S. blood donor management software solution assets and the Company's wholly-owned subsidiary Inlog Holdings France SAS. Refer to Note 5, ~~Divestitures~~ ~~for additional detail. Contract liabilities are classified as other liabilities and other long-term liabilities on the condensed consolidated balance sheets.~~

9. INVENTORIES

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)	(In thousands)	September 26, 2020		March 28, 2020		(In thousands)	July 3, 2021		April 3, 2021
Raw materials	Raw materials	$	82,349	$	76,867	Raw materials	$	75,278	$	74,910
Work-in-process	Work-in-process	13,890		11,021		Work-in-process	26,562		23,111
Finished goods	Finished goods	208,985		182,388		Finished goods	224,660		224,593
Total inventories	Total inventories	$	305,224	$	270,276	Total inventories	$	326,500	$	322,614

10. LEASES

Lessee Activity

During ~~the first quarter of~~ fiscal 2021, the Company entered into a lease for manufacturing space in Clinton, PA. The Company's current manufacturing operations in Leetsdale, PA will be relocated. The lease term associated with the new manufacturing facility is 15 years and 7 months and includes two five year renewal options followed by one four year renewal option. During ~~the first quarter of~~ fiscal 2021, the Company recorded a right-of-use asset of $11.3 million and corresponding liabilities of $15.4 million upon commencement of the lease term in May 2020. In addition, the Company recorded a $4.1 million lease incentive receivable associated with this lease ~~agreement.~~agreement which was received during fiscal 2021.

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. 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. Sales-type leases are not significant. Contract terms vary by customer and may include options to terminate the contract or options to extend the contract. Where devices are provided under operating lease arrangements, a substantial majority of the entire lease revenue is variable and subject to subsequent non-lease component (disposable products) sales. The allocation of revenue between the lease and non-lease components is based on stand-alone selling prices. Operating lease revenue represents less than 3 percent of the Company's total net sales.

11. NOTES PAYABLE AND LONG-TERM DEBT

Convertible Senior Notes

In March 2021, the Company issued $500.0 million aggregate principal amount of 0% convertible senior notes due 2026 (the “2026 Notes”). The 2026 Notes are governed by the terms of the Indenture between the Company and U.S. Bank National Association, as trustee (the “Indenture”). The total net proceeds from the sale of the 2026 Notes, after deducting the initial purchasers’ discounts and debt issuance costs, were approximately $486.7 million. 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.

In accounting for the issuance of the 2026 Notes, the 2026 Notes were separated into liability and equity components. The Company estimated the liability and equity components of the 2026 Notes to be $416.4 million and $83.6 million respectively, at the issuance date. On April 4, 2021, the Company adopted ASC Update No. 2020-06 using the modified retrospective method, which resulted in a decrease of $61.2 million to additional paid-in capital, a decrease to non-current deferred tax liabilities of $20.0 million, and an increase of $80.3 million to non-current convertible notes, net, on the Condensed Consolidated Balance Sheets. Additionally, retained earnings was adjusted to remove amortization expense recognized in prior periods related to the debt discount and the convertible notes no longer have a debt discount that will be amortized, net of taxes. 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.

Credit Facilities

On June 15, 2018, the Company entered into a credit agreement with certain lenders which provided for a $350.0 million term loan (the ~~"Term Loan"~~“Term Loan”) and a $350.0 million revolving loan (the ~~"Revolving~~“Revolving Credit ~~Facility"~~Facility” and together with the Term Loan, as amended from time to time, the ~~"Credit Facilities"~~“Credit Facilities”). The Credit Facilities expire on June 15, 2023. Interest on the Credit Facilities is established using LIBOR plus 1.13% - 1.75%, depending on the Company's leverage ratio. Under the Credit Facilities, the Company is required to maintain certain leverage and interest coverage ratios specified in the credit agreement as well as other customary non-financial affirmative and negative covenants. At ~~September 26, 2020, $315.0~~July 3, 2021, $297.5 million was outstanding under the Term Loan with an effective interest rate of ~~1.4% and~~ ~~$150.0 million~~ ~~was~~1.9%. There were no borrowings outstanding on the Revolving Credit Facility. ~~On October 8, 2020, subsequent to the balance sheet date, the Company reduced its borrowings on the Revolving Credit Facility by $150.0 million.~~ The Company also has ~~$26.2~~$25.5 million of uncommitted operating lines of credit to fund its global operations under which there were 0 outstanding borrowings as of ~~September 26, 2020.~~July 3, 2021.

The Company has required scheduled principal payments of $13.1 million during the remainder of ~~fiscal 2021, $17.5 million during~~ fiscal 2022, $214.4 million during fiscal 2023 and $70.0 million during fiscal 2024.

The Company was in compliance with the leverage and interest coverage ratios specified in the Credit Facilities as well as all other bank covenants as of ~~September 26, 2020.~~July 3, 2021.

12. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The Company manufactures, markets and sells its products globally. During the three ~~and six~~ months ended ~~September 26, 2020, 40.8% and 42.0%, respectively,~~July 3, 2021, 38.3% 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.

Accordingly, earnings and cash flows are exposed to market risk from changes in foreign currency exchange rates relative to the U.S. Dollar, the Company's reporting currency. The Company has a program in place that is designed to mitigate the exposure to changes in foreign currency exchange rates. That program includes the use of derivative financial instruments to minimize, for a period of time, the impact on its financial results from changes in foreign exchange rates. The Company utilizes foreign currency forward contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, primarily the Japanese Yen and the Euro, and to a lesser extent the Swiss Franc, Australian Dollar, Canadian Dollar and the Mexican Peso. This does not eliminate the impact of the volatility of foreign exchange rates. However, because the Company generally enters into forward contracts one year out, rates are fixed for a one-year period, thereby facilitating financial planning and resource allocation.

Designated Foreign Currency Hedge Contracts

All of the Company's designated foreign currency hedge contracts as of ~~September 26, 2020~~July 3, 2021 and ~~March 28, 2020~~April 3, 2021 were cash flow hedges under ASC 815, Derivatives and Hedging ("“ASC ~~815"~~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. Once the related third-party transaction occurs, the Company reclassifies the effective portion of any related gain or loss on the designated foreign currency hedge contracts to earnings. In the event the hedged forecasted transaction does not occur, or it becomes probable that it will not occur, the Company would reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. The Company had designated foreign currency hedge contracts outstanding in the contract amount of ~~$42.5~~$40.5 million as of ~~September 26, 2020~~July 3, 2021 and ~~$93.8~~$56.0 million as of ~~March 28, 2020.~~April 3, 2021. At ~~September 26, 2020,~~July 3, 2021, a ~~gain~~loss of ~~$1.6~~$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 ~~September 26, 2020~~July 3, 2021 mature within twelve months.

Non-Designated Foreign Currency Contracts

The Company manages its exposure to changes in foreign currency on a consolidated basis to take advantage of offsetting transactions and balances. It uses foreign currency forward contracts as a part of its strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These foreign currency forward contracts are entered into for periods consistent with currency transaction exposures, generally one month. They are not designated as cash flow or fair value hedges under ASC 815. These forward contracts are marked-to-market with changes in fair value recorded to earnings. The Company had non-designated foreign currency hedge contracts under ASC 815 outstanding in the contract amount of ~~$94.7~~$82.4 million as of ~~September 26, 2020~~July 3, 2021 and ~~$98.0~~$95.6 million as of ~~March 28, 2020.~~April 3, 2021.

Interest Rate Swaps

On June 15, 2018, the Company entered into Credit Facilities which provided for a $350.0 million Term Loan and a $350.0 million Revolving Credit Facility. Under the terms of the 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 2 interest rate swap agreements (the ~~"Swaps"~~“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. The Company designated the Swaps as cash flow hedges of variable interest rate risk associated with $345.6 million of indebtedness. For the ~~six~~three months ended ~~September 26, 2020,~~July 3, 2021, a gain of ~~$2.2~~$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.

Trade Receivables

In the ordinary course of business, the Company grants trade credit to its customers on normal credit terms. In an effort to reduce its credit risk, the Company (i) establishes credit limits for all customers, (ii) performs ongoing credit evaluations of customers’ financial condition, (iii) monitors the payment history and aging of customers’ receivables, and (iv) monitors open orders against an individual customer’s outstanding receivable balance.

The Company's allowance for credit losses is maintained for trade accounts receivable based on the expected collectability, the historical collection experience, the length of time an account is outstanding, the financial position of the customer and information provided by credit rating services. Effective March 29, 2020, the Company adopted Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326) which requires consideration of events or circumstances indicating historic collection rates may not be indicative of future collectability. For example, potential adverse changes to customer liquidity from new macroeconomic events such as the COVID-19 pandemic must be taken into consideration. To date, the Company has not experienced significant customer payment defaults, or identified other significant collectability concerns as a result of the pandemic.

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


		Three Months Ended				Six Months Ended					Three Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	July 3, 2021		June 27, 2020
Beginning balance	Beginning balance	$	3,446	$	3,624	$	3,824	$	3,937	Beginning balance	$	2,226	$	3,824
Credit (gain) loss	Credit (gain) loss	(483)		586		(742)		286		Credit (gain) loss	27		(259)
Write-offs	Write-offs	(264)		(102)		(383)		(115)		Write-offs	(17)		(119)
Ending balance	Ending balance	$	2,699	$	4,108	$	2,699	$	4,108	Ending balance	$	2,236	$	3,446

Fair Value of Derivative Instruments

The following table presents the effect of the Company's derivative instruments designated as cash flow hedges and those not designated as hedging instruments under ASC 815 in its ~~condensed consolidated statements~~unaudited Condensed Consolidated Statements of ~~income~~(Loss) Income and ~~comprehensive income~~Comprehensive (Loss) Income for the ~~six~~three months ended ~~September 26, 2020:~~July 3, 2021:


(In thousands)	(In thousands)	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings		Location in Condensed Consolidated Statements of Income and Comprehensive Income	Amount of Gain (Loss) Excluded from Effectiveness Testing		Location in Condensed Consolidated Statements of Income and Comprehensive Income	(In thousands)	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings		Location in Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income	Amount of Gain (Loss) Excluded from Effectiveness Testing		Location in Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
Designated foreign currency hedge contracts, net of tax	Designated foreign currency hedge contracts, net of tax	$	(1,610)	$	(728)	Net revenues, COGS and SG&A	$	(469)	Interest and other expense, net	Designated foreign currency hedge contracts, net of tax	$	(897)	$	329	Net revenues, COGS and SG&A	$	371	Interest and other expense, net
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	$	0	$	0		$	(3,907)	Interest and other expense, net	Non-designated foreign currency hedge contracts	$	0	$	0		$	(489)	Interest and other expense, net
Designated interest rate swaps, net of tax	Designated interest rate swaps, net of tax	$	22	$	(2,178)	Interest and other expense, net	$	0		Designated interest rate swaps, net of tax	$	973	$	(1,130)	Interest and other expense, net	$	0

The Company did not have fair value hedges or net investment hedges outstanding as of ~~September 26, 2020~~July 3, 2021 or ~~March 28, 2020.~~April 3, 2021. As of ~~September 26, 2020,~~July 3, 2021, 0 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. The Company determines the fair value of its derivative instruments using the framework prescribed by ASC 820, Fair Value Measurements and Disclosures, by considering the estimated amount it would receive or pay to sell or transfer these

instruments at the reporting date and by taking into account current interest rates, currency exchange rates, current interest rate curves, interest rate volatilities, the creditworthiness of the counterparty for assets, and its creditworthiness for liabilities. In certain instances, the Company may utilize financial models to measure fair value. Generally, it uses inputs that include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; other observable inputs for the asset or liability; and inputs derived principally from, or corroborated by, observable market data by correlation or other means. As of ~~September 26, 2020,~~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~~Condensed Consolidated Balance Sheets as of ~~September 26, 2020~~July 3, 2021 and ~~March 28, 2020:~~April 3, 2021:


(In thousands)	(In thousands)	Location in Condensed Consolidated Balance Sheets		As of			As of		(In thousands)		Location in Condensed Consolidated Balance Sheets		As of		As of
			September 26, 2020			March 28, 2020				July 3, 2021			April 3, 2021
Derivative Assets:	Derivative Assets:											Derivative Assets:
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	Other current assets		$	67		$	839	Designated foreign currency hedge contracts		Other current assets		$	1,680	$	2,061
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	Other current assets		411			$	377	Non-designated foreign currency hedge contracts		Other current assets		182		104

				$	478		$	1,216					$	1,862	$	2,165
Derivative Liabilities:	Derivative Liabilities:								Derivative Liabilities:
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	Other current liabilities		$	989		$	1,854	Designated foreign currency hedge contracts		Other current liabilities		$	186	$	454
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	Other current liabilities		223			1,435		Non-designated foreign currency hedge contracts		Other current liabilities		69		349
Designated interest rate swaps	Designated interest rate swaps	Other current liabilities		6,134			5,581		Designated interest rate swaps		Other current liabilities		5,540		5,550
Designated interest rate swaps	Designated interest rate swaps	Other long-term liabilities		7,521			9,475		Designated interest rate swaps		Other long-term liabilities		3,031		4,301
				$	14,867		$	18,345					$	8,826	$	10,654

Other Fair Value Measurements

Fair value is defined as the exit price that would be received from the sale of an asset or paid to transfer a liability, using assumptions that market participants would use in pricing an asset or liability. The fair value guidance establishes the following three-level hierarchy used for measuring fair value:

•Level 1 — Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.

•Level 2 — Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.

•Level 3 — Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.

The Company's money market funds carried at fair value are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

1618

Fair Value Measured on a Recurring Basis

Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of ~~September 26, 2020~~July 3, 2021 and ~~March 28, 2020.~~April 3, 2021.


		As of September 26, 2020									As of July 3, 2021
(In thousands)	(In thousands)	Level 1		Level 2		Level 3		Total		(In thousands)	Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Money market funds	Money market funds	$	167,175	$	0	$	—	$	167,175	Money market funds	$	20,677	$	0	$	—	$	20,677
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	0		67		—		67		Designated foreign currency hedge contracts	0		1,680		—		1,680
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		411		—		411		Non-designated foreign currency hedge contracts	0		182		—		182

		$	167,175	$	478	$	—	$	167,653		$	20,677	$	1,862	$	—	$	22,539
Liabilities	Liabilities									Liabilities
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	$	0	$	989	$	—	$	989	Designated foreign currency hedge contracts	$	0	$	186	$	—	$	186
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		223		—		223		Non-designated foreign currency hedge contracts	0		69		—		69
Designated interest rate swaps	Designated interest rate swaps	0		13,655		—		13,655		Designated interest rate swaps	0		8,571		—		8,571
Contingent consideration	Contingent consideration	—		—		3,920		3,920		Contingent consideration	—		—		38,402		38,402
		$	0	$	14,867	$	3,920	$	18,787		$	0	$	8,826	$	38,402	$	47,228

		As of March 28, 2020									As of April 3, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Money market funds	Money market funds	$	44,564	$	0	$	—	$	44,564	Money market funds	$	49,699	$	0	$	—	$	49,699
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	0		839		—		839		Designated foreign currency hedge contracts	0		2,061		—		2,061
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		377		—		377		Non-designated foreign currency hedge contracts	0		104		—		104

		$	44,564	$	1,216	$	—	$	45,780		$	49,699	$	2,165	$	—	$	51,864
Liabilities	Liabilities									Liabilities
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	$	0	$	1,854	$	—	$	1,854	Designated foreign currency hedge contracts	$	0	$	454	$	—	$	454
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		1,435		—		1,435		Non-designated foreign currency hedge contracts	0		349		—		349
Designated interest rate swaps	Designated interest rate swaps	0		15,056		—		15,056		Designated interest rate swaps	0		9,851		—		9,851
Contingent Consideration										Contingent Consideration	—		—		28,733		28,733
		$	0	$	18,345	$	—	$	18,345		$	0	$	10,654	$	28,733	$	39,387

Foreign currency hedge contracts - The fair value of foreign currency hedge contracts was measured using significant other observable inputs and valued by reference to over-the-counter quoted market prices for similar instruments. The Company does not believe that the fair value of these derivative instruments differs significantly from the amount that could be realized upon settlement or maturity, or that the changes in fair value will have a significant effect on its results of operations, financial condition or cash flows.

Interest rate swaps - The fair values of interest rate swaps are measured using the present value of expected future cash flows using market-based observable inputs, including credit risk and interest rate yield curves. The Company does not believe that the fair values of these derivative instruments differ significantly from the amounts that could be realized upon settlement or maturity, or that the changes in fair value will have a significant effect on its results of operations, financial condition or cash flows.

Contingent consideration - The fair value of contingent consideration liabilities is based on significant unobservable inputs, including management estimates and assumptions, and is measured based on the probability-weighted present value of the payments expected to be made. Accordingly, the fair value of contingent consideration has been classified as level 3 within the fair value hierarchy. The recurring level 3 fair value measurements of contingent consideration liabilities include the following significant unobservable inputs:

1719

Fair Value at

Valuation

Unobservable

Fair Value at

Valuation

Unobservable

(In thousands)

September 26, 2020

Technique

Input

Range

(In thousands)

July 3, 2021

Technique

Input

Range

Revenue-based payments

1,920

Discounted cash flow

Discount rate

8.5%

Revenue-based payments

34,073

Monte Carlo Simulation Model

Discount rate

2.2%

Projected year of payment

2021 - 2023

Projected year of payment

2022 - 2023

Revenue-based payments

2,119

Discounted cash flow

Discount rate

8.5%

Projected year of payment

2021 - 2023

Regulatory-based payment

2,000

Discounted cash flow

Discount rate

4.9%

Regulatory-based payment

2,210

Discounted cash flow

Discount rate

4.9%

Probability of payment

0% - 100%

Probability of payment

0% - 100%

Projected year of payment

2021 - 2023

Projected year of payment

2021 - 2023

As of ~~September 26, 2020,~~July 3, 2021, the maximum potential contingent consideration that the Company could be required to pay is ~~$4.5~~$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 ~~$3.9~~$38.4 million at ~~September 26, 2020.~~July 3, 2021. As of ~~September 26, 2020, $0.5~~July 3, 2021, $31.7 million was included in other ~~current~~ liabilities and ~~$3.4~~$6.7 million was included in other long-term liabilities on the condensed consolidated balance sheet.

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


(In thousands)
Balance at ~~March 28, 2020~~April 3, 2021	$	0
~~Acquisition date fair value of contingent consideration~~	~~3,920~~28,733
Change in fair value	— 9,774
Currency translation	(105)
Balance at ~~September 26, 2020~~July 3, 2021	$	~~3,920~~38,402

Other Fair Value Disclosures

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

13. COMMITMENTS AND CONTINGENCIES

The Company is a party to various legal proceedings and claims arising out of the ordinary course of its business. The Company believes there are no proceedings or claims pending against it the ultimate resolution of which could have a material adverse effect on the financial condition or results of operations. At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, Contingencies, for all matters. Legal costs are expensed as incurred.

During the third quarter of fiscal 2021, the Company received a subpoena from the U.S. Attorney’s Office for the District of Massachusetts. The subpoena requests certain documents regarding the Company’s apheresis and autotransfusion devices and disposables, including documents relating to product complaints and adverse event reporting, regulatory clearances and product design changes, among other matters. The Company is fully cooperating with this inquiry.

14. 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. ~~Historically, the~~The Company's ~~operating segments were based primarily on geography. Effective as of March 31, 2019, the Company completed the transition of~~reporting structure aligns with its operating structure toof three ~~global business units and accordingly, reorganized its reporting structure to align with its 3~~ global business units and the information that ~~will be~~is regularly reviewed by the Company's chief operating decision maker.

~~Following the reorganization, the~~

The Company's reportable segments are as follows:

•Plasma

•Blood Center

•Hospital

Management measures and evaluates the operating segments based on operating income. Management excludes certain corporate expenses from segment operating income. In addition, certain amounts that management considers to be non-recurring or non-operational are excluded from segment operating income because management evaluates the operating results of the segments excluding such items. These items include restructuring and ~~turnaround~~restructuring related costs, deal amortization, gains and losses on ~~divestitures~~dispositions and sale of assets, asset impairments, ~~and other related charges,~~ accelerated device depreciation and related costs, costs related to compliance with the European Union Medical Device Regulation, transaction and integration costs and certain ~~legal~~tax settlements and unusual or infrequent and material litigation-related charges. Although these amounts are excluded from segment operating income, as applicable, they are included in the reconciliations

that follow. Management measures and evaluates the Company's net revenues and operating income using internally derived standard currency exchange rates that remain constant from year to year; therefore, segment information is presented on this basis.

Selected information by reportable segment is presented below:


		Three Months Ended				Six Months Ended					Three Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	July 3, 2021		June 27, 2020
Net revenues	Net revenues									Net revenues
Plasma	Plasma	$	78,718	$	116,381	$	147,433	$	227,144	Plasma	$	71,803	$	68,715
Blood Center	Blood Center	74,715		83,667		154,029		161,663		Blood Center	71,736		79,314
Hospital	Hospital	51,022		49,662		96,593		96,849		Hospital	77,607		45,571
Net revenues by business unit	Net revenues by business unit	204,455		249,710		398,055		485,656		Net revenues by business unit	221,146		193,600
Service (1)	Service (1)	5,342		5,276		10,424		10,142		Service (1)	5,268		5,082
Effect of exchange rates	Effect of exchange rates	(311)		(2,420)		(3,416)		(4,781)		Effect of exchange rates	2,114		(3,105)
Net revenues	Net revenues	$	209,486	$	252,566	$	405,063	$	491,017	Net revenues	$	228,528	$	195,577
(1) Reflects revenue for service, maintenance and parts	(1) Reflects revenue for service, maintenance and parts									(1) Reflects revenue for service, maintenance and parts


		Three Months Ended				Six Months Ended					Three Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	July 3, 2021		June 27, 2020
Segment operating income	Segment operating income									Segment operating income
Plasma	Plasma	$	40,823	$	56,776	$	77,173	$	110,501	Plasma	$	35,346	$	36,350
Blood Center	Blood Center	33,757		41,208		72,502		78,927		Blood Center	33,882		38,745
Hospital	Hospital	21,459		20,851		39,242		39,767		Hospital	31,597		17,783
Segment operating income	Segment operating income	96,039		118,835		188,917		229,195		Segment operating income	100,825		92,878
Corporate expenses (1)	Corporate expenses (1)	(56,741)		(63,580)		(121,803)		(125,283)		Corporate expenses (1)	(68,731)		(65,062)
Effect of exchange rates	Effect of exchange rates	3,647		2,501		4,358		5,270		Effect of exchange rates	5,812		711
Integration and transaction costs										Integration and transaction costs	(16,733)		(1,290)
Deal amortization	Deal amortization	(8,136)		(5,935)		(16,399)		(11,909)		Deal amortization	(12,379)		(8,263)
Restructuring and turnaround costs		(4,440)		(3,757)		(8,440)		(5,784)
Transaction costs		(1,773)		0		(3,063)		0
PCS2 accelerated depreciation and related costs		(644)		(6,534)		(2,186)		(12,062)
Restructuring and restructuring related costs										Restructuring and restructuring related costs	(10,055)		(4,000)
Impairment of assets and PCS2 related charges										Impairment of assets and PCS2 related charges	(3,643)		(2,506)
European Medical Device Regulation costs and other	European Medical Device Regulation costs and other	(736)		180		(1,489)		147		European Medical Device Regulation costs and other	(2,371)		(753)
Impairment of assets and other related charges		68		(54)		(896)		(51,220)
Litigation-related charges										Litigation-related charges	(938)		0
Gains on divestitures and sale of assets	Gains on divestitures and sale of assets	31,498		8,083		31,498		8,083		Gains on divestitures and sale of assets	9,603		0
Operating income	Operating income	$	58,782	$	49,739	$	70,497	$	36,437	Operating income	$	1,390	$	11,715
(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.	(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.									(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.

Management reviews revenue based on the reportable segments noted above. Although these reportable segments are primarily product-based, they differ from the Company’s product line revenues for Plasma products and services and Blood Center products and services. Specifically, the Blood Center reportable segment includes plasma products utilized for collection in blood centers primarily for transfusion purposes. Additionally, product line revenues also include service revenues which are excluded from the reportable segments.

Net revenues by product line are as follows:


		Three Months Ended				Six Months Ended					Three Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	July 3, 2021		June 27, 2020
Plasma products and services	Plasma products and services	$	97,710	$	135,849	$	186,423	$	265,594	Plasma products and services	$	90,509	$	88,713
Blood Center products and services	Blood Center products and services	59,233		65,615		119,900		125,522		Blood Center products and services	57,747		60,667
Hospital products and services	Hospital products and services	52,543		51,102		98,740		99,901		Hospital products and services	80,272		46,197
Net revenues	Net revenues	$	209,486	$	252,566	$	405,063	$	491,017	Net revenues	$	228,528	$	195,577

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


		Three Months Ended				Six Months Ended					Three Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	July 3, 2021		June 27, 2020
United States	United States	$	123,984	$	161,880	$	234,993	$	318,255	United States	$	141,028	$	111,009
Japan	Japan	19,645		20,376		36,476		35,843		Japan	17,221		16,831
Europe	Europe	38,648		38,074		81,667		74,827		Europe	43,335		43,019
Asia	Asia	26,168		30,192		48,552		58,833		Asia	25,952		22,384
Other	Other	1,041		2,044		3,375		3,259		Other	992		2,334
Net revenues	Net revenues	$	209,486	$	252,566	$	405,063	$	491,017	Net revenues	$	228,528	$	195,577

15. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of Accumulated Other Comprehensive Loss are as follows:

(In thousands) Foreign Currency Defined Benefit Plans Net Unrealized Gain/Loss on Derivatives Total
Balance as of March 28, 2020 $ (31,100) $ (209) $ (13,826) $ (45,135)
Other comprehensive income (loss) before reclassifications(1)
5,345 0 (1,588) 3,757
Amounts reclassified from Accumulated Other Comprehensive Loss(1)
0 0 2,906 2,906
Net current period other comprehensive income 5,345 0 1,318 6,663
Balance as of September 26, 2020 $ (25,755) $ (209) $ (12,508) $ (38,472)
(1) Presented net of income taxes, the amounts of which are insignificant.


(In thousands)	Foreign Currency		Defined Benefit Plans		Net Unrealized Gain/(Loss) on Derivatives		Total
Balance as of April 3, 2021	$	(21,528)	$	(560)	$	(7,459)	$	(29,547)
Other comprehensive (loss) income before reclassifications(1)	(430)		0		76		(354)
Amounts reclassified from Accumulated Other Comprehensive Loss(1)	0		0		801		801
Net current period other comprehensive (loss) income	(430)		0		877		447
Balance as of July 3, 2021	$	(21,958)	$	(560)	$	(6,582)	$	(29,100)
(1) Presented net of income taxes, the amounts of which are insignificant.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with both our interim condensed consolidated financial statements and notes thereto which appear elsewhere in this Quarterly Report on Form 10-Q and our annual consolidated financial statements, notes thereto and the MD&A contained in our Annual Report on Form 10-K for the fiscal year ended ~~March 28, 2020.~~April 3, 2021. The following discussion may contain forward-looking statements and should be read in conjunction with the “Cautionary Statement Regarding Forward-Looking Information” in this discussion.

Introduction

Haemonetics is a global healthcare company dedicated to providing a suite of innovative ~~hematology~~medical products and solutions tofor customers to help them improve patient care and reduce the cost of healthcare. Our technology addresses important medical ~~markets including~~markets: blood and plasma component collection, the surgical suite and hospital transfusion services. When used in this report, the terms “we,” “us,” “our” and “the Company” mean Haemonetics.

We view our operations and manage our business in three principal reporting segments: Plasma, Blood Center and Hospital. For that purpose, “Plasma” includes plasma collection devices and disposables, plasma donor management software, and anticoagulant and saline sold to plasma customers. “Blood Center” includes blood collection and processing devices and disposables for red cells, platelets and whole blood. ~~"Hospital"~~“Hospital”, which is comprised of Hemostasis Management, Cell Salvage, ~~and~~ Transfusion Management and Vascular Closure products, includes devices and methodologies for measuring coagulation characteristics of blood, surgical blood salvage systems, specialized blood cell processing systems and disposables, ~~and~~ blood transfusion management ~~software.~~software and vascular closure devices.

We believe that Plasma and Hospital have growth potential, while Blood Center competes in challenging markets ~~which~~that require us to manage the business differently, including reducing costs, shrinking the scope of the current product line, and evaluating opportunities to exit unfavorable customer contracts.

Recent Developments

~~Persona~~TMOperational Excellence Program

~~On October 2,~~During the second quarter of fiscal 2022, our Board of Directors approved the revised Operational Excellence Program (the “2020 Program”). The revised program is designed to improve product and service quality, reduce cost principally in our 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. We now expect to incur aggregate charges between $95 million and $105 million by the end of fiscal 2025 and to achieve total gross savings of $115 million to $125 million on an annualized basis once the program is completed. 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, ~~we received U.S. Food~~the Company incurred $9.9 million and ~~Drug Administration ("FDA") 510(k) clearance~~$3.5 million, respectively, of restructuring and restructuring related costs under this program. Total cumulative charges under this program are $36.9 million as of July 3, 2021.

CSL Contract Loss

In April 2021, CSL informed us of its intent not to renew its supply agreement for ~~our NexSys PCS® with Persona technology. NexSys PCS with Persona technology uses a percent plasma nomogram that customizes~~the use of PCS2 plasma collection ~~based on~~system devices and the purchase of disposable plasmapheresis kits (the “Supply Agreement”) following the expiration of the current term of the Supply Agreement in June 2022. In fiscal year 2021, revenue under this Supply Agreement was $88.6 million, or 10.2% of total revenue. As a result of this anticipated contract loss, we recorded a $20.9 million one-time asset impairment charge relating to disposables manufacturing equipment and $5.0 million of additional expenses in the fourth quarter of fiscal 2021. In the first quarter of fiscal 2022, we incurred an ~~individual donor's body composition. The new, proprietary Persona technology strengthens the NexSys PCS value proposition and reinforces our commitment~~additional $2.8 million of accelerated depreciation expense relating to ~~supporting the plasma industry.~~disposables manufacturing equipment that is no longer in use.

COVID-19

We continue to closely manage the impacts of the COVID-19 pandemic on our business results of operations and financial condition. The progression of the COVID-19 pandemic during ~~the first half of~~ fiscal ~~2021~~2022 significantly impacted our financial results. While the duration and additional implications remain uncertain, the full extent of the impact will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets.

Our priorities continue to be the safety of our employees and business continuity ~~and cash preservation~~ while continuing to invest in ~~organic~~ growth opportunities. Our manufacturing and supply chain remain operational without ~~any shutdowns or~~ significant disruptions and we continue to operate in all of our markets.

Although the pace and timing of the recovery is uncertain, we remain confident in the long term strength of the end markets that we serve across our three business units. For additional information regarding the expected impacts to our business units and the various risks posed by the COVID-19 pandemic, refer to Results of Operations within Management's Discussion and

Analysis ~~and Risk Factors~~ contained in this Quarterly Report on Form ~~10-Q.~~

~~Acquisition~~

~~On April 1, 2020, we acquired enicor GmbH ("enicor"),~~10-Q and Risk Factors contained in Item 1A of the ~~manufacturer of ClotPro~~®, a new generation whole blood coagulation testing system that is currently available in select European and Asia Pacific markets, for total consideration of $20.5 million, which consisted of upfront payments of $16.6 million and the fair value of contingent consideration of $3.9 million. The contingent consideration, which could total a maximum of $4.5 million, consists of payments related to the achievement of certain revenue and regulatory milestones. The acquisition of this viscoelastic diagnostic device augments the Company's portfolio of hemostasis analyzers within the Hospital business unit. Refer to Note 4, Acquisition, to the Unaudited Condensed Consolidated Financial Statements in this QuarterlyAnnual Report on Form ~~10-Q~~10-K for ~~additional information.~~

~~Divestitures~~

~~Fajardo, Puerto Rico Manufacturing Operations~~

On June 29, 2020, we sold our Fajardo, Puerto Rico, manufacturing operations to GVS, S.p.A ("GVS"), a leading provider of advanced filtration solutions for critical applications for $15.5 million ($8.1 million, net of cash transferred). Under the terms of the agreement, Haemonetics retained all intellectual property rights to its proprietary blood filters currently manufactured at its Fajardo facility and GVS acquired certain assets consisting primarily of property, plant and equipment, inventory and cash and has assumed certain related liabilities. In addition, the two parties entered into a long-term supply and development agreement that, among other things, grants GVS exclusive rights to manufacture and supply the blood filters currently produced at the

~~Fajardo facility for Haemonetics. This divestiture will allow Haemonetics to utilize GVS' experience and scale in filtration to deliver reliable, cost-efficient products to its customers.~~

~~U.S. Blood Donor Management Software~~

On July 1, 2020, we sold certain U.S. blood donor management software solution assets within our Blood Center business unit to the GPI Group for an upfront cash payment of $14.0 million ($13.6 million, net of working capital adjustments) and recognized an $11.7 million gain on the sale. In addition to the cash received upon closing, we may also receive up to an additional $14.0 million, contingent upon the achievement of certain performance measures. This divestiture better positions Haemonetics for sustainable growth by enabling the Company to focus on its core capabilities while delivering quality products and services where it brings distinct value.

~~Inlog Holdings France~~

On September 18, 2020, we sold our wholly-owned subsidiary Inlog Holdings France SAS to Abénex Capital ("Abénex"), a private equity firm based in France for $30.5 million ($24.5 million, net of cash transferred) and recognized a gain of $19.8 million. Inlog Holdings France SAS, through its subsidiary In Log SAS, develops and sells blood bank and hospital software solutions used predominantly in France and in several other countries outside of the U.S. This divestiture and the sale of our U.S. blood donor management software better position us to focus on our growth segments.

~~Refer to Note 5,~~ ~~Divestitures, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information pertaining to these divestitures.~~

~~Restructuring Program~~

In July 2019, our Board of Directors approved a new Operational Excellence Program (the "2020 Program") and delegated authority to management to determine the detail of the initiatives that will comprise the program. The 2020 Program is designed to improve operational performance and reduce cost principally in our manufacturing and supply chain operations. We estimate that we will incur aggregate charges between $60 million and $70 million in connection with the 2020 Program. These charges, the majority of which will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal ~~2023. Savings from the 2020 Program are targeted to reach $80 million to $90 million on an annualized basis once the program is completed. During the three and six months~~year ended ~~September 26, 2020, we incurred $4.4 million and $8.0 million, respectively, of restructuring and turnaround costs under this program.~~April 3, 2021.

Financial Summary


		Three Months Ended								Six Months Ended									Three Months Ended
(In thousands, except per share data)	(In thousands, except per share data)	September 26, 2020			September 28, 2019			% Increase/ (Decrease)		September 26, 2020			September 28, 2019			% Increase/ (Decrease)		(In thousands, except per share data)	July 3, 2021			June 27, 2020			% Increase/ (Decrease)
Net revenues	Net revenues	$	209,486		$	252,566		(17.1)	%	$	405,063		$	491,017		(17.5)	%	Net revenues	$	228,528		$	195,577		16.8	%
Gross profit	Gross profit	$	105,744		$	127,000		(16.7)	%	$	195,774		$	242,906		(19.4)	%	Gross profit	$	108,085		$	90,030		20.1	%
% of net revenues	% of net revenues	50.5		%	50.3		%			48.3		%	49.5		%			% of net revenues	47.3		%	46.0		%
Operating expenses	Operating expenses	$	46,962		$	77,261		(39.2)	%	$	125,277		$	206,469		(39.3)	%	Operating expenses	$	106,695		$	78,315		36.2	%
Operating income	Operating income	$	58,782		$	49,739		18.2	%	$	70,497		$	36,437		93.5	%	Operating income	$	1,390		$	11,715		(88.1)	%
% of net revenues	% of net revenues	28.1		%	19.7		%			17.4		%	7.4		%			% of net revenues	0.6		%	6.0		%
Interest and other expense, net	Interest and other expense, net	$	(3,826)		$	(4,651)		(17.7)	%	$	(7,561)		$	(9,074)		(16.7)	%	Interest and other expense, net	$	(4,398)		$	(3,735)		17.8	%
Income before provision for income taxes		$	54,956		$	45,088		21.9	%	$	62,936		$	27,363		n/m
(Loss) income before provision (benefit) for income taxes																		(Loss) income before provision (benefit) for income taxes	$	(3,008)		$	7,980		n/m
Provision (benefit) for income taxes	Provision (benefit) for income taxes	$	6,855		$	7,602		(9.8)	%	$	4,308		$	(1,644)		n/m		Provision (benefit) for income taxes	$	1,446		$	(2,547)		n/m
% of pre-tax income	% of pre-tax income	12.5		%	16.9		%			6.8		%	(6.0)		%			% of pre-tax income	(48.1)		%	(31.9)		%
Net income		$	48,101		$	37,486		28.3	%	$	58,628		$	29,007		n/m
Net (loss) income																		Net (loss) income	$	(4,454)		$	10,527		n/m
% of net revenues	% of net revenues	23.0		%	14.8		%			14.5		%	5.9		%			% of net revenues	(1.9)		%	5.4		%
Net income per share - basic		$	0.95		$	0.74		28.4	%	$	1.16		$	0.57		n/m
Net income per share - diluted		$	0.94		$	0.72		30.6	%	$	1.15		$	0.56		n/m
Net (loss) income per share - basic																		Net (loss) income per share - basic	$	(0.09)		$	0.21		n/m
Net (loss) income per share - diluted																		Net (loss) income per share - diluted	$	(0.09)		$	0.21		n/m

Net revenues ~~decreased 17.1% and 17.5%~~increased 16.8% during the three ~~and six~~ months ended ~~September 26, 2020, respectively,~~July 3, 2021 as compared with the same periods of fiscal ~~2020.~~2021. Without the effect of foreign exchange, net revenues ~~decreased 17.7% and 17.6%~~increased 14.0% during the three ~~and six~~ months ended ~~September 26, 2020, respectively,~~July 3, 2021 as compared with the same periods of fiscal ~~2020.~~2021. Revenue ~~decreases~~increases in ~~Plasma due to the COVID-19 pandemic~~Hospital primarily drove the overall ~~decrease~~increase in revenue during the three ~~and six~~ months ended ~~September 26, 2020.~~July 3, 2021.

Operating income ~~increased~~decreased during the three months ended ~~September 26, 2020,~~July 3, 2021, as compared with the same period of fiscal ~~2020,~~2021, primarily due to increased spend related to the acquisition of Cardiva Medical, Inc. (“Cardiva”), including higher transaction and integration costs driven by an increase in the fair value of contingent consideration and the amortization of the fair value inventory step-up, as well as asset impairments and increased intangible amortization expense. The decrease was partially offset by favorable volumes and product mix, gains on divestitures and ~~incremental~~productivity savings from the 2020 Program. The absence of impairment charges associated with the divestiture of our plasma liquid solutions operations to CSL in the prior year also contributed to the increase during the six months ended September 26, 2020. These increases were partially offset by the impact of the COVID-19 pandemic on revenue and gross margin, net of savings in operating expenses from cost containment actions taken to offset these negative effects.

Management's Use of Non-GAAP Measures

Management uses non-GAAP financial measures, in addition to financial measures in accordance with accounting principles generally accepted in the United States of America ("(“U.S. ~~GAAP"~~GAAP”), to monitor the financial performance of the business, make informed business decisions, establish budgets and forecast future results. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with U.S. GAAP. Constant currency growth, a non-GAAP financial measure, measures the change in revenue between the current and prior year periods using a constant currency conversion rate. We have provided this non-GAAP financial measure because we believe it provides meaningful information regarding our results on a consistent and comparable basis for the periods presented.

RESULTS OF OPERATIONS

Net Revenues by Geography


		Three Months Ended											Three Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		Reported growth		Currency impact		Constant currency growth (1)		(In thousands)	July 3, 2021		June 27, 2020		Reported growth		Currency impact		Constant currency growth (1)
United States	United States	$	123,984	$	161,880	(23.4)	%	—	%	(23.4)	%	United States	$	141,028	$	111,009	27.0	%	—	%	27.0	%
International	International	85,502		90,686		(5.7)	%	2.1	%	(7.8)	%	International	87,500		84,568		3.5	%	6.1	%	(2.6)	%
Net revenues	Net revenues	$	209,486	$	252,566	(17.1)	%	0.6	%	(17.7)	%	Net revenues	$	228,528	$	195,577	16.8	%	2.8	%	14.0	%

(1) Constant currency growth, a non-GAAP financial measure, measures the change in revenue between the current and prior year periods using a constant currency. See “"Management's Use of Non-GAAP Measures."

Six Months Ended
(In thousands) September 26,
2020 September 28,
2019 Reported growth Currency impact
Constant currency growth (1)
United States $ 234,993 $ 318,255 (26.2) % — % (26.2) %
International 170,070 172,762 (1.6) % 0.7 % (2.3) %
Net revenues $ 405,063 $ 491,017 (17.5) % 0.1 % (17.6) %

~~(1)~~ ~~Constant currency growth, a non-GAAP financial measure, measures the change in revenue between the current and prior year periods using a constant currency. See~~ ~~"Management's Use of Non-GAAP Measures."~~”

Our principal operations are in the U.S, Europe, Japan and other parts of Asia. Our products are marketed in approximately 8590 countries around the world through a combination of our direct sales force, independent distributors and agents. Our revenue generated outside the U.S. was ~~40.8% and 42.0%, respectively,~~38.3% of total net revenues during the three ~~and six~~ months ended ~~September 26, 2020,~~July 3, 2021, as compared with ~~35.9% and 35.2%, respectively,~~43.2% during the three ~~and six~~ months ended ~~September 28, 2019.~~June 27, 2020. International sales are generally conducted in local currencies, primarily Japanese Yen, Euro, Chinese Yuan and Australian Dollars. Our results of operations are impacted by changes in foreign exchange rates, particularly in the value of the Yen, Euro and Australian Dollar relative to the U.S. Dollar. We have placed foreign currency hedges to mitigate our exposure to foreign currency fluctuations.

Please see the section entitled “Foreign Exchange” in this discussion for a more complete explanation of how foreign currency affects our business and our strategy for managing this exposure.

Net Revenues by Business Unit


		Three Months Ended											Three Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		Reported growth		Currency impact		Constant currency growth (1)		(In thousands)	July 3, 2021		June 27, 2020		Reported growth		Currency impact		Constant currency growth (1)
Plasma	Plasma	$	78,408	$	115,925	(32.4)	%	—	%	(32.4)	%	Plasma	$	71,844	$	68,211	5.3	%	0.8	%	4.5	%
Blood Center	Blood Center	74,913		81,982		(8.6)	%	2.1	%	(10.7)	%	Blood Center	72,945		77,789		(6.2)	%	3.4	%	(9.6)	%
Hospital (2)	Hospital (2)	50,978		49,702		2.6	%	(0.1)	%	2.7	%	Hospital (2)	78,494		44,839		75.1	%	4.8	%	70.3	%
Service	Service	5,187		4,957		4.6	%	3.3	%	1.3	%	Service	5,245		4,738		10.7	%	7.0	%	3.7	%
Net revenues	Net revenues	$	209,486	$	252,566	(17.1)	%	0.6	%	(17.7)	%	Net revenues	$	228,528	$	195,577	16.8	%	2.8	%	14.0	%

(2) Hospital revenue includes Hemostasis Management revenue of ~~$26.0~~$32.2 million and ~~$24.8~~$24.0 million during the three months ended ~~September 26,~~July 3, 2021 and June 27, 2020, ~~and September 28, 2019,~~ respectively. Hemostasis Management revenue increased ~~4.9%~~34.3% in the ~~second~~first quarter of fiscal ~~2021,~~2022, as compared with the same period of fiscal ~~2020.~~2021. Without the effect of foreign exchange, Hemostasis Management revenue increased ~~5.6%~~31.1% in the ~~second~~first quarter of fiscal ~~2021,~~2022, as compared with the same period of fiscal ~~2020.~~

Six Months Ended
(In thousands) September 26,
2020 September 28,
2019 Reported growth Currency impact
Constant currency growth (1)
Plasma $ 146,619 $ 226,347 (35.2) % (0.1) % (35.1) %
Blood Center 152,702 157,785 (3.2) % 1.5 % (4.7) %
Hospital (2)
95,817 97,399 (1.6) % (1.3) % (0.3) %
Service 9,925 9,486 4.6 % 1.8 % 2.8 %
Net revenues $ 405,063 $ 491,017 (17.5) % 0.1 % (17.6) %

~~(2)~~ Hospital revenue includes Hemostasis Management revenue of $50.0 million and $49.2 million during the six months ended September 26, 2020 and September 28, 2019, respectively. Hemostasis Management revenue increased 1.7% in the first six months of fiscal 2021, as compared with the same period of fiscal 2020. Without the effect of foreign exchange, Hemostasis Management revenue increased 4.4% in the first six months of fiscal 2021, as compared with the same period of fiscal 2020.2021.

Plasma

Plasma revenue ~~decreased 32.4% and 35.2%~~increased 5.3% during the three ~~and six~~ months ended ~~September 26, 2020, respectively,~~July 3, 2021 as compared with the same period of fiscal 2021. Without the effect of foreign exchange, Plasma revenue increased 4.5% during the three months ended July 3, 2021 as compared with the same periods of fiscal 2020. Without the effect of foreign exchange, Plasma revenue decreased 32.4% and 35.1% during the three and six months ended September 26, 2020, respectively, as compared with the same periods of fiscal 2020. This revenue decrease during the three and six months ended September 26, 2020 was2021. These increases were primarily driven by ~~a decline~~increase in ~~the~~ volume of plasma disposables ~~primarily~~and increase in ~~the U.S., due to the COVID-19 pandemic~~software revenue, partially offset by pricing adjustments and declines in plasma liquid solutions as a result of certain strategic exits within our ~~plasma~~ liquid solutions business. ~~Additionally, declines in software revenue due to a one time favorable impact in the prior year period also contributed to the decrease during the six months ended September 26, 2020.~~

~~While we experienced slight improvements during three months ended September 26, 2020 compared with~~We continue experiencing the ~~prior quarter, we anticipate a continued~~ negative impact ~~from~~of COVID-19 on our ~~fiscal 2021 Plasma results. The~~business. While the timing of ~~the~~ plasma collection recovery remains uncertain, ~~as our customers respond to declines in donor traffic. While~~ we ~~expect a return to historic collection volume growth rates in~~believe the ~~future, we anticipate that~~impacts of the ~~recovery of~~pandemic on plasma collection are temporary and anticipate volumes ~~will be protracted.~~to recover by the end of fiscal 2022. We remain confident in the strength of the plasma end market growth as the long-term global demand for plasma-derived pharmaceuticals is expected to continue.

In early April 2021, CSL informed us of its intent not to renew its supply agreement for the use of PCS2 plasma collection system devices and the purchase of disposable plasmapheresis kits following the expiration of the current term of the Supply Agreement in June 2022. In fiscal 2021, revenue under this Supply Agreement was $88.6 million.

2425

Blood Center

Blood Center revenue decreased ~~8.6% and 3.2%~~6.2% during the three ~~and six~~ months ended ~~September 26, 2020, respectively,~~July 3, 2021 as compared with the same ~~periods~~period of fiscal ~~2020.~~2021. Without the effect of foreign exchange, Blood Center revenue decreased ~~10.7% and 4.7%~~9.6% during the three ~~and six~~ months ended ~~September 26, 2020, respectively,~~July 3, 2021 as compared with the same ~~periods~~period of fiscal ~~2020. The decrease during the three and six months ended September 26, 2020 was~~2021. These decreases were primarily driven by ~~declines in apheresis revenue as certain customers converted to alternative sources of supply. The expected impact of~~ the ~~loss of this apheresis business is an incremental revenue decline of approximately $17 million in fiscal 2021 as compared with fiscal 2020. The~~ divestiture of certain ~~U.S.~~ blood donor management software solution assets and continued declines in whole blood ~~disposables also contributed to the decrease. The decrease during the six months ended September 26, 2020 was partially offset by growth and order timing of international sales.~~disposables.

~~While we~~We have not yet experienced the reversal of the large stocking orders made by distributors and blood collectors during the first quarter of fiscal 2021 in response to the COVID-19 pandemic, but we may experience a ~~partial~~ reversal in future periods. Although hospital procedures have resumed, we anticipate that it will take time for procedure volumes to fully revert back to pre-COVID-19 levels, which may temporarily reduce the demand for blood products in fiscal 2021.

Hospital

Hospital revenue increased ~~2.6% and decreased 1.6%~~75.1% during the three ~~and six~~ months ended ~~September 26, 2020, respectively,~~July 3, 2021 as compared with the same ~~periods~~period of fiscal ~~2020.~~2021. Without the effect of foreign exchange, Hospital revenue increased ~~2.7% and decreased 0.3%~~70.3% during the three ~~and six~~ months ended ~~September 26, 2020, respectively,~~July 3, 2021 as compared with the same ~~periods~~period of fiscal ~~2020. The increase during~~2021. These increases were primarily attributable to Vascular Closure revenue resulting from the ~~three months ended September 26, 2020 was primarily due to an increase in TEG disposables revenue in~~acquisition of Cardiva and the U.S. and Transfusion Management growth in Europe, partially offset by declines in Cell Salvage. The decrease during the six months ended September 26, 2020 was primarily due to a decline in Cell Salvage revenue as a resultimpact of the COVID-19 pandemic on the prior year period. The increases were partially offset by ~~increases in Transfusion Management~~the divestiture of certain blood bank and ~~Hemostasis Management sales.~~

During the six months ended September 26, 2020, revenue in the Hospital business unit was negatively impacted by COVID-19. We experienced these declines primarily in China and the U.S., however, we had consistent improvement in the second quarter of fiscal 2021 in both markets as restrictions in China eased and hospitals in the U.S. experienced an increase in procedure volume compared with the prior quarter.hospital software solution assets. We believe that the demand for our hospital products is inherently strong and that procedure volumes will continue to improve with a return to normal levels ~~anticipated by the end of our~~during fiscal ~~year.~~2022.

Gross Profit


		Three Months Ended								Six Months Ended									Three Months Ended
(In thousands)	(In thousands)	September 26, 2020			September 28, 2019			% Increase/ (Decrease)		September 26, 2020			September 28, 2019			% Increase/ (Decrease)		(In thousands)	July 3, 2021			June 27, 2020			% Increase/ (Decrease)
Gross profit	Gross profit	$	105,744		$	127,000		(16.7)	%	$	195,774		$	242,906		(19.4)	%	Gross profit	$	108,085		$	90,030		20.1	%
% of net revenues	% of net revenues	50.5		%	50.3		%			48.3		%	49.5		%			% of net revenues	47.3		%	46.0		%

Gross profit ~~decreased 16.7% and 19.4%~~increased 20.1% during the three ~~and six~~ months ended ~~September 26, 2020, respectively,~~July 3, 2021 as compared with the same ~~periods~~period of fiscal ~~2020.~~2021. Without the effect of foreign exchange, gross profit ~~decreased 18.3% and 19.3%~~increased 12.5% during the three ~~and six~~ months ended ~~September 26, 2020, respectively,~~July 3, 2021 as compared with the same ~~periods~~period of fiscal ~~2020. The decrease in gross profit margin during the three and six months ended September 26, 2020 was~~2021. These increases were primarily driven by ~~decreased~~

~~sales volume, unfavorable~~the addition of Vascular Closure, favorable volumes and product mix, ~~and higher operational costs as a result of~~lower expenses related to the COVID-19 ~~pandemic. The decline was partially offset by lower depreciation expense~~pandemic and productivity savings from the 2020 Program.

The increase was partially offset by pricing adjustments, the amortization of the fair value inventory step-up related to the acquisition of Cardiva, asset impairments and recent divestitures.

Operating Expenses


		Three Months Ended								Six Months Ended									Three Months Ended
(In thousands)	(In thousands)	September 26, 2020			September 28, 2019			% Increase/ (Decrease)		September 26, 2020			September 28, 2019			% Increase/ (Decrease)		(In thousands)	July 3, 2021			June 27, 2020			% Increase/ (Decrease)
Research and development	Research and development	$	6,763		$	7,422		(8.9)	%	$	14,513		$	14,909		(2.7)	%	Research and development	$	12,701		$	7,750		63.9	%
% of net revenues	% of net revenues	3.2		%	2.9		%			3.6		%	3.0		%			% of net revenues	5.6		%	4.0		%
Selling, general and administrative	Selling, general and administrative	$	71,697		$	77,922		(8.0)	%	$	141,234		$	150,922		(6.4)	%	Selling, general and administrative	$	91,218		$	62,302		46.4	%
% of net revenues	% of net revenues	34.2		%	30.9		%			34.9		%	30.7		%			% of net revenues	39.9		%	31.9		%
Impairment of assets		$	—		$	—		—	%	$	1,028		$	48,721		(97.9)	%
Amortization of intangible assets																		Amortization of intangible assets	$	12,379		$	8,263		49.8	%
% of net revenues	% of net revenues	—		%	—		%			0.3		%	9.9		%			% of net revenues	5.4		%	4.2		%

Gains on divestitures and sale of assets	Gains on divestitures and sale of assets	$	(31,498)		$	(8,083)		n/m		$	(31,498)		$	(8,083)		n/m		Gains on divestitures and sale of assets	$	(9,603)		$	—		n/m
% of net revenues	% of net revenues	(15.0)		%	(3.2)		%			(7.8)		%	(1.6)		%			% of net revenues	(4.2)		%	—		%
Total operating expenses	Total operating expenses	$	46,962		$	77,261		(39.2)	%	$	125,277		$	206,469		(39.3)	%	Total operating expenses	$	106,695		$	78,315		36.2	%
% of net revenues	% of net revenues	22.4		%	30.6		%			30.9		%	42.0		%			% of net revenues	46.7		%	40.0		%

Research and Development

Research and development expenses ~~decreased 8.9% and 2.7%~~increased 63.9% during the three ~~and six~~ months ended ~~September 26, 2020, respectively,~~July 3, 2021 as compared with the same ~~periods~~period of fiscal ~~2020.~~2021. Without the effect of foreign exchange, research and development expenses ~~decreased 9.0% and 2.3%~~increased 61.2% during the three ~~and six~~ months ended ~~September 26, 2020, respectively,~~July 3, 2021 as compared with the same ~~periods~~period of fiscal ~~2020. The decrease during the three and six months ended September 26, 2020 was~~2021. These increases were primarily due to increased spend related to investments in our Hospital Business unit, primarily driven by Vascular Closure, as well as costs related to European Medical Device Regulation. These increases were partially offset by cost savings ~~primarily~~ related to the 2020 Program ~~partially offset by continued investments, primarily in our Hospital Business unit.~~and lower restructuring and restructuring related costs.

Selling, General and Administrative

Selling, general and administrative expenses ~~decreased 8.0% and 6.4%~~increased 46.4% during the three ~~and six~~ months ended ~~September 26, 2020, respectively,~~July 3, 2021 as compared with the same ~~periods~~period of fiscal ~~2020.~~2021. Without the effect of foreign exchange, selling, general, and administrative expenses ~~decreased 8.3% and 6.2%~~increased 44.4% during the three ~~and six~~ months ended ~~September 26, 2020, respectively,~~July 3, 2021 as compared with the same ~~periods~~period of fiscal ~~2020. The decrease during the three and six months ended September 26, 2020 was~~2021. These increases were primarily due to ~~a reduction in variable compensation, cost containment actions taken to offset the negative effects~~increased spend related to the ~~COVID-19 pandemic~~acquisition of Cardiva, including higher transaction and ~~incremental productivity savings from~~integration costs driven by an increase in the ~~2020 Program.~~fair value of contingent consideration, and higher share-based and variable compensation expense, partially offset by asset impairments recognized in the prior year period and lower PCS2 related costs.

~~Impairment~~Amortization of ~~assets~~Intangible Assets

We recognized ~~impairment charges~~amortization expense of ~~$1.0~~$12.4 million ~~during the six months ended September 26, 2020 in connection with the sale of our Fajardo, Puerto Rico, manufacturing operations. During the six months ended September 28, 2019, we recognized $48.7~~and $8.3 million ~~of impairment charges in connection with the sale of our Union, South Carolina facility. There were no impairments recognized~~ during the three months ended ~~September 26,~~July 3, 2021 and June 27, 2020, ~~and September 28, 2019.~~respectively. The increase was primarily driven by an increase in intangible assets resulting from recent acquisitions.

Gains on ~~divestitures~~Divestitures

We recognized gains on divestitures of ~~$31.5~~$9.6 million during the three ~~and six~~ months ended ~~September 26, 2020.~~July 3, 2021. Refer to Note 5, Divestitures, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information pertaining to these divestitures. ~~We recognized~~There were no gains on ~~sale of assets of $8.1~~divestitures during the three ~~and six~~ months ended ~~September 28, 2019 due to the sale of assets associated with our Braintree corporate headquarters.~~June 27, 2020.

Interest and Other Expense, Net

Interest and other expenses increased 17.8% during the three months ended July 3, 2021 as compared with the same period of fiscal 2021. Without the effects of foreign exchange, interest and other expenses increased 16.5% during the three months ended July 3, 2021 as compared with the same period of fiscal 2021. The increase is primarily driven by the amortization of deferred financing fees associated with the 2026 Notes and realized losses on interest rate swaps, partially offset by a reduction in interest expense from borrowings under our $350.0 million term loan and $350.0 million revolving loan constitutes the majority of our interest and other expenses. During the three and six months ended September 26, 2020, our interest expense associated with this debt declined by $2.0 million and $3.2 million, respectively, despite higher loan balances in the current year period due to ~~a decrease in the effective interest rate.~~lower borrowings. The effective interest rate on total debt outstanding as of ~~September 26, 2020~~July 3, 2021 was ~~1.4%~~1.9%.

Income Taxes

We conduct business globally and report our results of operations in a number of foreign jurisdictions in addition to the United States. Our reported tax rate is impacted by the jurisdictional mix of earnings in any given period as the foreign jurisdictions in which we operate have tax rates that differ from the U.S. statutory tax rate.

For the three ~~and six~~ months ended ~~September 26, 2020,~~July 3, 2021, we reported income tax expense of ~~$6.9~~$1.4 million ~~and $4.3 million, respectively,~~ representing an effective tax ~~rates~~rate of ~~12.5% and 6.8%, respectively.~~(48.1)%. The effective tax rate for the three ~~and six~~ months ended ~~September 26,~~July 3, 2021 includes $0.8 million discrete tax expense relating to stock compensation shortfalls.

For the three months ended June 27, 2020, we reported an income tax benefit of $2.5 million representing an effective tax 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 ~~$0.1 million and $4.1 million, respectively.~~$4.0 million. The effective tax ~~rates were~~rate was also impacted by the jurisdictional mix of earnings including divestiture transactions. During the three and six months ended September 26, 2020, we sold our Fajardo, Puerto Rico manufacturing operations, certain U.S. blood donor management software solution assets, and our 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. Refer to Note 5, ~~Divestitures, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for information pertaining to these divestitures.~~

For the three and six months ended September 28, 2019, we reported an income tax provision of $7.6 million and a benefit of $1.6 million, respectively, representing effective tax rates of 16.9% and (6.0)%, respectively. The effective tax rate for the three and six months ended September 28, 2019 was lower than the U.S. statutory tax rate primarily due to a discrete tax benefit recognized from excess stock compensation deductions of $4.4 million and $9.3 million, respectively. The effective tax rates were also impacted by the jurisdictional mix of earnings and the impact of the divestiture of the Union, South Carolina facility in the first quarter of fiscal 2020.

earnings.

Liquidity and Capital Resources

The following table contains certain key performance indicators we believe depict our liquidity and cash flow position:


(Dollars in thousands)	(Dollars in thousands)	September 26, 2020		March 28, 2020		(Dollars in thousands)	July 3, 2021		April 3, 2021
Cash & cash equivalents	Cash & cash equivalents	$	279,169	$	137,311	Cash & cash equivalents	$	173,462	$	192,305
Working capital	Working capital	$	421,711	$	328,817	Working capital	$	456,029	$	440,051
Current ratio	Current ratio	2.2		2.2		Current ratio	3.0		2.7
Net debt(1)	Net debt(1)	$	(184,848)	$	(245,182)	Net debt(1)	$	(610,908)	$	(515,303)
Days sales outstanding (DSO)	Days sales outstanding (DSO)	61		62		Days sales outstanding (DSO)	52		51
Inventory turnover	Inventory turnover	1.2		1.7		Inventory turnover	1.1		1.2

(1)Net debt position is the sum of cash and cash equivalents less total debt.

In July 2019, our Board of Directors approved the 2020 Program. We estimate that we will incur aggregate charges between $60 million and $70 million in connection with the 2020 Program. These charges, the majority of which will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal 2023. During the three and six months ended September 26, 2020, we incurred $4.4 million and $8.0 million, respectively, of restructuring and turnaround costs under this program.

Our primary sources of liquidity are cash and cash equivalents, internally generated cash flow from operations, our revolving credit line and proceeds from employee stock option exercises. We believe these sources are sufficient to fund our cash requirements over at least the next twelve months. Our expected cash outlays relate primarily to acquisitions, investments, capital expenditures ~~including production~~and the build out of ~~the NexSys PCS and Plasma plant capacity expansions,~~our new manufacturing facility in Clinton, PA, cash payments under the loan agreement and restructuring initiatives.

In March 2021, we issued $500.0 million aggregate principal amount of 0% convertible senior notes due 2026, or the 2026 Notes. The 2026 Notes are governed by the terms of the Indenture between the Company and ~~turnaround initiatives.~~U.S. Bank National Association, as trustee. The total net proceeds from the sale of the 2026 Notes, after deducting the initial purchasers’ discounts and debt issuance costs, were approximately $486.7 million. The 2026 Notes will mature on March 1, 2026, unless earlier converted, redeemed or repurchased. The 2026 Notes have an effective interest rate of 2.72% as of July 3, 2021.

As of ~~September 26, 2020,~~July 3, 2021, we had ~~$279.2~~$173.5 million in cash and cash equivalents, the majority of which is held in the U.S. or in countries from which it can be repatriated to the U.S. On June 15, 2018, we entered into a five-year credit agreement which provided for a $350.0 million term loan and a $350.0 million revolving loan (together with the term loan, as amended from time to time, the ~~"Credit Facilities"~~“Credit Facilities”). Interest on the term loan and revolving loan is established using LIBOR plus 1.13% - 1.75%, depending on our leverage ratio. Under the Credit Facilities, we are required to maintain certain leverage and interest coverage ratios specified in the credit agreement as well as other customary non-financial affirmative and negative covenants. ~~At September 26, 2020, $315.0~~The Company and its lenders agreed to increase the maximum consolidated leverage ratio the Company is required to maintain for the four consecutive quarters immediately following the closing of the Cardiva acquisition to 4.25:1.0, after which the maximum consolidated leverage ratio the Company is required to maintain will revert to 3.5:1.0.

As of July 3, 2021, $297.5 million was outstanding under the term loan with an effective interest rate of ~~1.4% and $150.0 million was~~1.9%. There were no borrowings outstanding on the revolving loan. ~~On October 8, 2020, subsequent to the balance sheet date, we reduced our borrowings on the revolving loan by $150.0 million.~~ We also had ~~$26.2~~$25.5 million of uncommitted operating lines of credit to fund our global operations under which there were no outstanding borrowings as of ~~September 26, 2020.~~July 3, 2021.

We have scheduled principal payments of $13.1 million required during the remainder of fiscal ~~2020.~~2022. We were in compliance with the leverage and interest coverage ratios specified in the credit agreement as well as all other bank covenants as of ~~September 26, 2020.~~July 3, 2021.

In ~~May 2019,~~August 2021, our Board of Directors ~~authorized~~approved a revised 2020 Program. We now estimate that we will incur aggregate charges between $95 million and $105 million in connection with the ~~repurchase~~2020 Program. These charges, the majority of upwhich will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to ~~$500.0~~execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal 2025. During the three months ended July 3, 2021, we incurred $9.9 million of ~~Haemonetics common shares over the next two years. As of September 26, 2020, the total remaining authorization for repurchases of the Company's common stock~~restructuring and restructuring related costs under ~~the share repurchase program was $325.0 million.~~

We continue to manage the ongoing impacts of the COVID-19 pandemic. While the duration and impacts of the pandemic remain uncertain, we have been successful in preserving cash by implementing a number of actions including restricting travel, reducing certain compensation-related items and non-essential spending and delaying hiring. We will continue to invest in our business with a bias towards organic growth and innovation that will continue to expand our commercial capabilities. Our commitment to our shareholders will continue to be an important element of our capital allocation strategy, however, our priority will be focused on providing the appropriate levels of funding across our organization and ensuring that we are well positioned to address any challenges that may arise over the course of the pandemic.this program.

Cash Flows


		Six Months Ended							Three Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		Increase/ (Decrease)		(In thousands)	July 3, 2021		June 27, 2020
Net cash provided by (used in):	Net cash provided by (used in):							Net cash provided by (used in):
Operating activities	Operating activities	$	40,967	$	32,529	$	8,438	Operating activities	$	(1,680)	$	11,812
Investing activities	Investing activities	13,239		7,825		5,414		Investing activities	(15,851)		(23,896)
Financing activities	Financing activities	84,633		(96,427)		181,060		Financing activities	(1,634)		148,951
Effect of exchange rate changes on cash and cash equivalents(1)	Effect of exchange rate changes on cash and cash equivalents(1)	3,019		(1,248)		4,267		Effect of exchange rate changes on cash and cash equivalents(1)	322		1,547
Net change in cash and cash equivalents	Net change in cash and cash equivalents	$	141,858	$	(57,321)			Net change in cash and cash equivalents	$	(18,843)	$	138,414

(1)The balance sheet is affected by spot exchange rates used to translate local currency amounts into U.S. Dollars. In accordance with U.S. GAAP, we have removed the effect of foreign currency throughout our cash flow statement, except for its effect on our cash and cash equivalents.

Net cash ~~provided by~~used in operating activities increased by ~~$8.4~~$13.5 million during the ~~six~~three months ended ~~September 26, 2020,~~July 3, 2021, as compared with the ~~six~~three months ended ~~September 28, 2019.~~June 27, 2020. The increase in cash ~~provided by~~used operating activities was primarily the result of ~~a decrease~~an increase in working capital ~~as compared with the prior year period~~ due to lower ~~inventory growth, primarily related to NexSys PCS devices, a decrease in the build~~collections of accounts receivable ~~due to lower sales~~ and ~~improved collection timing, and~~higher inventory growth as well as a ~~large payment to a key service provider in the prior year period. The~~ reduction in net income, as adjusted for depreciation, amortization and other non-cash charges compared with the prior year ~~period, partially offset this increase.~~period.

Net cash ~~provided by~~used in investing activities ~~increased~~decreased by ~~$5.4~~$8.0 million during the ~~six~~three months ended ~~September 26, 2020,~~July 3, 2021, as compared with the ~~six~~three months ended ~~September 28, 2019.~~June 27, 2020. The ~~increase~~decrease in cash used in investing activities was primarily the result of higher cash ~~received related to~~paid for acquisitions during the ~~sale of our Fajardo, Puerto Rico manufacturing operations, certain U.S. blood donor management software solution assets and, our wholly-owned subsidiary Inlog Holdings France SAS. This was~~prior year period, partially offset by ~~the cash paid for the acquisition of enicor during fiscal 2021 and proceeds received related to the divestiture of our plasma liquid solutions operations~~an increase in ~~the prior year period.~~capital expenditures.

Net cash ~~provided by~~used in financing activities increased by ~~$181.1~~$150.6 million during the ~~six~~three months ended ~~September 26, 2020,~~July 3, 2021, as compared with the ~~six~~three months ended ~~September 28, 2019,~~June 27, 2020, primarily due to a ~~decrease in share repurchases compared with the prior year period and an increase~~reduction in borrowings on our revolving credit facility, net of ~~payments, during fiscal 2021.~~payments.

Concentration of Credit Risk

Concentrations of credit risk with respect to trade accounts receivable are generally limited due to our large number of customers and their diversity across many geographic areas. Certain markets and industries, however, can expose us to concentrations of credit risk. For example, in the Plasma business unit, sales are concentrated with several large customers. As a result, accounts receivable extended to any one of these biopharmaceutical customers can be significant at any point in time. In addition, a portion of our trade accounts receivable outside the U.S. include sales to government-owned or supported healthcare systems in several countries, which are subject to payment delays and local economic conditions. Payment is dependent upon the financial stability and creditworthiness of those countries' national economies.

We have not incurred significant losses on receivables. We continually evaluate all receivables for potential collection risks associated with the availability of government funding and reimbursement practices. If the financial condition of customers or the countries' healthcare systems deteriorate such that their ability to make payments is uncertain, allowances may be required in future periods.

Inflation

We do not believe that inflation had a significant impact on our results of operations for the periods presented. Historically, we believe we have been able to mitigate the effects of inflation by improving our manufacturing and purchasing efficiencies, by increasing employee productivity and by adjusting the selling prices of products. We continue to monitor inflation pressures generally and raw materials indices that may affect our procurement and production costs. Increases in the price of petroleum derivatives could result in corresponding increases in our costs to procure plastic raw materials.

Foreign Exchange

During the three ~~and six~~ months ended ~~September 26, 2020, 40.8% and 42.0%, respectively,~~July 3, 2021, 38.3% of our sales were generated outside the U.S., generally in foreign currencies, yet our reporting currency is the U.S. Dollar. We also incur certain manufacturing, marketing and selling costs in international markets in local currency. Our primary foreign currency exposures relate to sales denominated in Euro, Japanese Yen, Chinese Yuan and Australian Dollars. We also have foreign currency exposure related to manufacturing and other operational costs denominated in Swiss Francs, Canadian Dollars, Mexican Pesos and Malaysian Ringgit. The Yen, Euro, Yuan and Australian Dollar sales exposure is partially mitigated by costs and expenses for foreign operations and sourcing products denominated in foreign currencies.

Since our foreign currency denominated Yen, Euro, Yuan and Australian Dollar sales exceed the foreign currency denominated costs, whenever the U.S. Dollar strengthens relative to the Yen, Euro, Yuan or Australian Dollar, there is an adverse effect on our results of operations and, conversely, whenever the U.S. Dollar weakens relative to the Yen, Euro, Yuan or Australian Dollar, there is a positive effect on our results of operations. For Swiss Francs, Canadian Dollars Mexican Pesos and Malaysian Ringgit our primary cash flows relate to product costs or costs and expenses of local operations. Whenever the U.S. Dollar strengthens relative to these foreign currencies, there is a positive effect on our results of operations. Conversely, whenever the U.S. Dollar weakens relative to these currencies, there is an adverse effect on our results of operations.

We have a program in place that is designed to mitigate our exposure to changes in foreign currency exchange rates. That program includes the use of derivative financial instruments to minimize, for a period of time, the unforeseen impact on our financial results from changes in foreign exchange rates. We utilize forward foreign currency contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, primarily Japanese Yen and Euro, and to a lesser extent Swiss Francs, Australian Dollars, Canadian Dollars and Mexican Pesos. This does not eliminate the volatility of foreign exchange rates, but because we generally enter into forward contracts one year out, rates are fixed for a one-year period, thereby facilitating financial planning and resource allocation. These contracts are designated as cash flow hedges. The final impact of

currency fluctuations on the results of operations is dependent on the local currency amounts hedged and the actual local currency results.

Recent Accounting Pronouncements

~~Standards to be Implemented~~

In ~~December 2019,~~July 2021, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued Accounting Standards Codification ~~("ASC"~~(“ASC”) Update No. ~~2019-12, Income Taxes~~2021-05. Leases (Topic ~~740)~~842). The new guidance ~~will improve consistent application of~~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 ASC 842 and ~~simplify~~ the ~~accounting for income taxes by removing certain exceptions to the general principals in Topic 740.~~lessor would have otherwise recognized a day-one loss. ASC Update No. ~~2019-12~~2021-05 is effective for annual periods beginning after December 15, ~~2020,~~2021, and is applicable to us in fiscal ~~2022.~~2023. We are in the process of determining the effect that the adoption will have on our financial position and results of operations.

Cautionary Statement Regarding Forward-Looking Information

Certain statements that we make from time to time, including statements contained in this ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K and incorporated by reference into this report, constitute “forward looking-statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.Forward-looking statements do not relate strictly to historical or current facts and reflect management’s assumptions, views, plans, objectives and projections about the future. Forward-looking statements may be identified by the use of words such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “foresees,” “potential” and other words of similar meaning in conjunction with, among other things: discussions of future operations; expected operating results and financial performance; impacts of the COVID-19 pandemic; the Company’s strategy for growth; product development, commercialization and anticipated performance and benefits; regulatory approvals; ~~impact~~impacts of ~~planned~~ acquisitions or dispositions; market position and expenditures.

Because forward-looking statements are based on current beliefs, expectations and assumptions regarding future events, they are subject to uncertainties, risks and changes that are difficult to predict and many of which are outside of the Company's control. Investors should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, the Company’s actual results and financial condition could vary materially from expectations and projections expressed or implied in its forward-looking statements. Investors are therefore cautioned not to rely on these forward-looking statements.

The following are some important factors that could cause our actual results to differ from our expectations in any forward-looking statements. For further discussion of these and other factors, see Item 1A. Risk Factors in ~~our most recent Annual Report on Form 10-K.~~this report.

•The effect of the ongoing COVID-19 pandemic, or outbreaks of communicable diseases, on our business, financial conditions and results of operations, ~~which may~~including the time it will take for vaccines to be ~~heightened if~~broadly distributed and accepted in the ~~pandemic~~U.S. and ~~various government responses to it continue for an extended period~~the rest of ~~time;~~the world, and the effectiveness of such vaccines in slowing or stopping the spread of COVID-19 and mitigating the economic effects of the pandemic;

•Failure to achieve our long-term strategic and financial-improvement goals;

•Demand for and market acceptance risks for new and existing products, including material reductions in purchasing from or loss of a significant customer;

•Product quality or safety concerns, leading to product recalls, withdrawals, regulatory action by the FDA (or similar non-U.S. regulatory agencies), reputational damage, declining sales or litigation;

•Security breaches of our information technology systems or our products, which could impair our ability to conduct business or compromise sensitive information of the Company or its customers, suppliers and other business partners, or of customers' patients;

•Pricing pressures resulting from trends toward ~~health care~~healthcare cost containment, including the continued consolidation among ~~health care~~healthcare providers and other market participants;

•The continuity, availability and pricing of plastic and other raw materials, finished goods and components used in the manufacturing of our products (including those purchased from sole-source suppliers) and the related continuity of our manufacturing, sterilization, supply and distribution;

•Our ability to develop, manufacture and market new products and technologies successfully and in a timely manner and the ability of our competitors and other third parties to develop products or ~~enhancements on commercially acceptable terms~~technologies that render our products or ~~at all;~~technologies noncompetitive or obsolete;

•Our ability to obtain the anticipated benefits of restructuring programs that we have or may undertake, including the Operational Excellence Program;

•The potential that the expected strategic benefits and opportunities from our acquisition of Cardiva and any other planned or completed acquisition or divestiture by the Company may not be realized or may take longer to realize than expected;

•The impact of enhanced requirements to obtain regulatory approval in the U.S. and around the world ~~including the EU MDR~~ and the associated timing and cost of product ~~approval, and~~approval;

•Our ability to comply with established and developing U.S. and foreign legal and regulatory requirements, including ~~the U.S. Foreign Corrupt Practices Act, or~~ FCPA, MDR and similar laws in other jurisdictions, as well as U.S. and foreign export and import restrictions and tariffs;

•Our ability to meet our debt obligations and raise additional capital when desired on terms reasonably acceptable to us;

•The potential impact of our convertible senior notes and related capped call transactions;

•Our ability to execute and realize anticipated benefits from our investments in emerging economies;

•~~Our ability to retain and attract key personnel;~~

•~~Costs and risks associated with product liability and other litigation claims;~~

•~~Our ability to meet our existing debt obligations and raise additional capital when desire on terms reasonably acceptable to us;~~

•The potential effect of foreign currency fluctuations and interest rate fluctuations on our net sales, expenses, and resulting margins;

•The impact of changes in U.S. and international tax laws;

•~~Market conditions impacting our stock price and/or share repurchase program, and the possibility that our share repurchase program may be delayed, suspended or discontinued; and~~

•Our ability to protect intellectual property and the outcome of patent ~~litigation.~~litigation;

•Costs and risks associated with product liability and other litigation claims;

•Our ability to retain and attract key personnel; and

•Market conditions impacting our stock price and/or share repurchase programs we may enter into from time to time, and the possibility that such share repurchase programs may be delayed, suspended or discontinued.

Investors should understand that it is not possible to predict or identify all such factors and should not consider the risks described above and in Item 1A. Risk Factors~~in our Annual Report on Form 10-K~~ to be a complete statement of all potential risks and uncertainties. The Company does not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure relative to market risk is due to foreign exchange risk and interest rate risk.

Foreign Exchange Risk

See the section above entitled Foreign Exchange for a discussion of how foreign currency affects our business. It is our policy to minimize, for a period of time, the unforeseen impact on our financial results of fluctuations in foreign exchange rates by using derivative financial instruments known as forward contracts to hedge anticipated cash flows from forecasted foreign currency denominated sales and costs. We do not use the financial instruments for speculative or trading activities.

We estimate the change in the fair value of all forward contracts assuming both a 10% strengthening and weakening of the U.S. Dollar relative to all other major currencies. 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 ~~$10.8~~$6.9 million increase in the fair value of the forward contracts; whereas a 10% weakening of the U.S. Dollar would result in a ~~$12.2~~$8.0 million decrease of the fair value of the forward contracts.

Interest Rate Risk

Our exposure to changes in interest rates is associated with borrowings under our Credit Facilities, all of which is variable rate debt. Total outstanding debt under our Credit Facilities as of ~~September 26, 2020~~July 3, 2021 was ~~$315.0~~$297.5 million with an interest rate of ~~1.4%~~1.9% based on prevailing LIBOR rates. An increase of 100 basis points in LIBOR rates would result in additional annual interest expense of ~~$1.0~~$0.7 million. On August 21, 2018, we entered into two interest rate swap agreements to effectively convert $241.9 million of borrowings under our Credit Facilities from a variable rate to a fixed rate. 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.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation, as of ~~September 26, 2020,~~July 3, 2021, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively) regarding the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15 of the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of ~~September 26, 2020.~~July 3, 2021.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three ~~and six~~ months ended ~~September 26, 2020~~July 3, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Information with respect to this Item may be found in Note 13, Commitments and Contingencies to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors

There are no material changes from the Risk Factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended ~~March 28, 2020.~~April 3, 2021.

Item 2. Issuer Purchases of Equity Securities

In May 2019, our Board of Directors authorized the repurchase of up to $500 million of Haemonetics common shares over the next two ~~years. We had no share repurchases during~~year period ending May 2021. During the ~~six~~three months ended ~~September 26, 2020. The total remaining authorization for~~July 3, 2021, we did not make any additional repurchases ~~of our common stock~~ under ~~the share repurchase~~this program ~~was $325 million as of September 26, 2020.~~which expired in May 2021.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits


3.1			Restated Articles of Organization of Haemonetics Corporation, reflecting Articles of Amendment dated August 23, 1993, August 21, 2006, July 26, 2018 and July 25, 2019 (filed as Exhibit 3.1 to the Company’s Form 8-K dated July 29, 2019 and incorporated herein by reference).

3.2			By-Laws of the Company, as amended through June 29, 2020 (filed as Exhibit 3.1 to the Company’s Form 8-K dated June 30, 2020 and incorporated herein by reference).









31.1			Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002, of Christopher A. Simon, President and Chief Executive Officer of the Company.

31.2			Certification pursuant to Section 302 of Sarbanes-Oxley of 2002, of William Burke, Executive Vice President, Chief Financial Officer of the Company.

32.1			Certification Pursuant to 18 United States Code Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Christopher A. Simon, President and Chief Executive Officer of the Company.

32.2			Certification Pursuant to 18 United States Code Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of William Burke, Executive Vice President, Chief Financial Officer of the Company.

101*			The following materials from Haemonetics Corporation on Form 10-Q for the quarter ended ~~September 26, 2020,~~July 3, 2021, formatted in inline Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements.

104			Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101).

_____________________________






*						In accordance with Rule 406T of Regulation S-T, the XBRL-related information in Exhibit 101 to this Form 10-Q is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, is deemed not filed for the purposes of section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	HAEMONETICS CORPORATION
~~November 4, 2020~~August 11, 2021	By:	/s/ Christopher A. Simon
		Christopher A. Simon, President and Chief Executive Officer
		(Principal Executive Officer)

~~November 4, 2020~~August 11, 2021	By:	/s/ William Burke
		William Burke, Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)