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~~December 26, 2020


☐			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~~January 29, 2021: 50,821,698

HAEMONETICS CORPORATION

INDEX



			PAGE
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income - Three and ~~Six~~Nine Months Ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019			3
Unaudited Condensed Consolidated Balance Sheet - ~~September~~ December 26, 2020 and Consolidated Balance Sheet - March 28, 2020			4
Unaudited Condensed Consolidated Statements of Stockholders' Equity - Three and ~~Six~~Nine Months Ended ~~September~~December 26, 2020 and ~~September~~ December 28, 2019			5
Unaudited Condensed Consolidated Statements of Cash Flows - ~~Six~~Nine Months Ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019			67
Notes to Unaudited Condensed Consolidated Financial Statements			78

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

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk			3134

ITEM 4. Controls and Procedures			3235

PART II. OTHER INFORMATION			3336

ITEM 1. Legal Proceedings			3336

ITEM 1A. Risk Factors			3336

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			3336

ITEM 3. Defaults upon Senior Securities			3437

ITEM 4. Mine Safety Disclosures			3437

ITEM 5. Other Information			3437

ITEM 6. Exhibits			3538

SIGNATURES			3639

ITEM 1. FINANCIAL STATEMENTS

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited in thousands, except per share data)


		Three Months Ended				Six Months Ended					Three Months Ended				Nine Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Net revenues	Net revenues	$	209,486	$	252,566	$	405,063	$	491,017	Net revenues	$	240,371	$	258,970	$	645,434	$	749,987
Cost of goods sold	Cost of goods sold	103,742		125,566		209,289		248,111		Cost of goods sold	120,114		130,920		329,403		379,031
Gross profit	Gross profit	105,744		127,000		195,774		242,906		Gross profit	120,257		128,050		316,031		370,956
Operating expenses:	Operating expenses:									Operating expenses:
Research and development	Research and development	6,763		7,422		14,513		14,909		Research and development	7,501		7,000		22,014		21,909
Selling, general and administrative	Selling, general and administrative	71,697		77,922		141,234		150,922		Selling, general and administrative	73,446		78,267		214,680		229,189
Impairment of assets	Impairment of assets	0		0		1,028		48,721		Impairment of assets	0		1,876		1,028		50,597
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	(1,115)		0		(32,613)		(8,083)
Total operating expenses	Total operating expenses	46,962		77,261		125,277		206,469		Total operating expenses	79,832		87,143		205,109		293,612
Operating income	Operating income	58,782		49,739		70,497		36,437		Operating income	40,425		40,907		110,922		77,344
Interest and other expense, net	Interest and other expense, net	(3,826)		(4,651)		(7,561)		(9,074)		Interest and other expense, net	(3,051)		(3,078)		(10,612)		(12,152)
Income before provision for income taxes	Income before provision for income taxes	54,956		45,088		62,936		27,363		Income before provision for income taxes	37,374		37,829		100,310		65,192
Provision (benefit) for income taxes		6,855		7,602		4,308		(1,644)
Provision for income taxes										Provision for income taxes	5,492		7,934		9,800		6,290
Net income	Net income	$	48,101	$	37,486	$	58,628	$	29,007	Net income	$	31,882	$	29,895	$	90,510	$	58,902

Net income per share - basic	Net income per share - basic	$	0.95	$	0.74	$	1.16	$	0.57	Net income per share - basic	$	0.63	$	0.59	$	1.79	$	1.16
Net income per share - diluted	Net income per share - diluted	$	0.94	$	0.72	$	1.15	$	0.56	Net income per share - diluted	$	0.62	$	0.58	$	1.77	$	1.13

Weighted average shares outstanding	Weighted average shares outstanding									Weighted average shares outstanding
Basic	Basic	50,696		50,791		50,557		50,901		Basic	50,789		50,630		50,634		50,810
Diluted	Diluted	51,093		52,046		51,170		52,174		Diluted	51,363		51,638		51,234		51,995

Comprehensive income	Comprehensive income	$	53,335	$	35,378	$	65,291	$	23,281	Comprehensive income	$	40,496	$	32,296	$	105,787	$	55,577

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			December 26, 2020		March 28, 2020
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	$	189,002	$	137,311
Accounts receivable, less allowance of $2,699 at September 26, 2020 and $3,824 at March 28, 2020		141,533		165,207
Accounts receivable, less allowance of $2,525 at December 26, 2020 and $3,824 at March 28, 2020						Accounts receivable, less allowance of $2,525 at December 26, 2020 and $3,824 at March 28, 2020	146,939		165,207
Inventories, net	Inventories, net	305,224		270,276		Inventories, net	299,710		270,276
Prepaid expenses and other current assets	Prepaid expenses and other current assets	34,353		30,845		Prepaid expenses and other current assets	32,697		30,845
Total current assets	Total current assets	760,279		603,639		Total current assets	668,348		603,639
Property, plant and equipment, net	Property, plant and equipment, net	240,405		253,399		Property, plant and equipment, net	240,009		253,399
Intangible assets, less accumulated amortization of $299,450 at September 26, 2020 and $296,942 at March 28, 2020		127,210		133,106
Intangible assets, less accumulated amortization of $309,951 at December 26, 2020 and $296,942 at March 28, 2020						Intangible assets, less accumulated amortization of $309,951 at December 26, 2020 and $296,942 at March 28, 2020	119,716		133,106
Goodwill	Goodwill	214,594		210,652		Goodwill	215,508		210,652
Deferred tax asset	Deferred tax asset	4,306		3,930		Deferred tax asset	4,558		3,930
Other long-term assets	Other long-term assets	71,380		62,384		Other long-term assets	69,929		62,384
Total assets	Total assets	$	1,418,174	$	1,267,110	Total assets	$	1,318,068	$	1,267,110
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	$	17,055	$	76,980
Accounts payable	Accounts payable	49,071		50,730		Accounts payable	42,979		50,730
Accrued payroll and related costs	Accrued payroll and related costs	29,226		49,471		Accrued payroll and related costs	35,127		49,471
Other liabilities	Other liabilities	93,270		97,641		Other liabilities	99,223		97,641
Total current liabilities	Total current liabilities	338,568		274,822		Total current liabilities	194,384		274,822
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	292,721		305,513
Deferred tax liability	Deferred tax liability	10,480		10,562		Deferred tax liability	9,803		10,562
Other long-term liabilities	Other long-term liabilities	104,187		89,104		Other long-term liabilities	102,008		89,104
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 — 50,817,222 shares at December 26, 2020 and 50,322,930 shares at March 28, 2020						Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 50,817,222 shares at December 26, 2020 and 50,322,930 shares at March 28, 2020	508		503
Additional paid-in capital	Additional paid-in capital	568,748		553,229		Additional paid-in capital	579,480		553,229
Retained earnings	Retained earnings	137,140		78,512		Retained earnings	169,022		78,512
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(38,472)		(45,135)		Accumulated other comprehensive loss	(29,858)		(45,135)
Total stockholders’ equity	Total stockholders’ equity	667,923		587,109		Total stockholders’ equity	719,152		587,109
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,418,174	$	1,267,110	Total liabilities and stockholders’ equity	$	1,318,068	$	1,267,110

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	Balance, March 28, 2020	50,323	$	503			$	553,229						$	78,512			$	(45,135)		$	587,109	Balance, March 28, 2020		50,323			$	503			$	553,229			$	78,512			$	(45,135)	$	587,109
Employee stock purchase plan	Employee stock purchase plan	22	—		2,144				—			—				2,144			Employee stock purchase plan	22			—				2,144				—				—				2,144
Exercise of stock options	Exercise of stock options	28	1		1,192				—			—				1,193			Exercise of stock options	28			1			1,192				—				—				1,193

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	298			3			(3)				—				—				0
Share-based compensation expense	Share-based compensation expense	—	—		6,167				—			—				6,167			Share-based compensation expense	—			—			6,167				—				—				6,167

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

Exercise of stock options	Exercise of stock options	2	0		67				—			—				67			Exercise of stock options	2			0			67				—				—				67

Issuance of restricted stock, net of cancellations	Issuance of restricted stock, net of cancellations	30	0		0				—			—				0			Issuance of restricted stock, net of cancellations	30			0			0				—				—				0
Share-based compensation expense	Share-based compensation expense	—	—		5,952				—			—				5,952			Share-based compensation expense	—			—			5,952				—				—				5,952

Net income	Net income	—	—		—				48,101			—				48,101			Net income	—			—			—				48,101				—				48,101
Other comprehensive income	Other comprehensive income	—	—		—				—			5,234				5,234			Other comprehensive income	—			—			—				—				5,234				5,234
Balance, September 26, 2020	Balance, September 26, 2020	50,703	$	507	$	568,748			$	137,140		$	(38,472)			$	667,923		Balance, September 26, 2020	50,703			$	507		$	568,748			$	137,140			$	(38,472)			$	667,923
Employee stock purchase plan																			Employee stock purchase plan	22			0			1,868				—				—				1,868
Exercise of stock options																			Exercise of stock options	50			—			2,578				—				—				2,578

Issuance of restricted stock, net of cancellations																			Issuance of restricted stock, net of cancellations	42			1			(1)				—				—				0
Share-based compensation expense																			Share-based compensation expense	—			—			6,287				—				—				6,287

Net income																			Net income	—			—			—				31,882				—				31,882
Other comprehensive income																			Other comprehensive income	—			—			—				—				8,614				8,614
Balance, December 26, 2020																			Balance, December 26, 2020	50,817			$	508		$	579,480			$	169,022			$	(29,858)			$	719,152

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

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
	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
Employee stock purchase plan	20	1		1,537		—		—		1,538
Exercise of stock options	60	0		1,667		—		—		1,667
Shares repurchased	(411)	(4)		(4,335)		(45,661)		—		(50,000)
Issuance of restricted stock, net of cancellations	114	1		(1)		—		—		0
Share-based compensation expense	—	—		5,325		—		—		5,325
Net income	—	—		—		29,895		—		29,895
Other comprehensive income	—	—		—		—		2,401		2,401
Balance, December 28, 2019	50,391	$	504	$	537,913	$	69,868	$	(33,705)	$	574,580

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

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited in thousands)


		Six Months Ended					Nine Months Ended
		September 26, 2020		September 28, 2019			December 26, 2020		December 28, 2019
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income	Net income	$	58,628	$	29,007	Net income	$	90,510	$	58,902
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	62,377		81,524
Impairment of assets	Impairment of assets	1,028		48,721		Impairment of assets	1,028		50,597
Share-based compensation expense	Share-based compensation expense	12,119		9,730		Share-based compensation expense	18,406		15,055
Deferred tax benefit	Deferred tax benefit	(3,031)		(7,290)		Deferred tax benefit	(3,953)		(4,747)
Provision for losses on accounts receivable and inventory	Provision for losses on accounts receivable and inventory	1,057		(1,857)		Provision for losses on accounts receivable and inventory	2,942		(2,246)
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	(32,613)		(8,083)
Other non-cash operating activities	Other non-cash operating activities	362		140		Other non-cash operating activities	1,351		1,945
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	18,588		13,807
Change in inventories	Change in inventories	(38,189)		(59,439)		Change in inventories	(33,728)		(68,251)
Change in prepaid income taxes	Change in prepaid income taxes	(635)		(1,588)		Change in prepaid income taxes	1,181		(273)
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	2,687		(8,829)
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	(21,518)		(17,590)
Net cash provided by operating activities	Net cash provided by operating activities	40,967		32,529		Net cash provided by operating activities	107,258		111,811
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	(25,408)		(38,112)
Acquisition	Acquisition	(16,606)		0		Acquisition	(16,606)		0
Proceeds from divestitures	Proceeds from divestitures	44,978		9,808		Proceeds from divestitures	44,587		9,808
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	1,085		16,263
Net cash provided by investing activities		13,239		7,825
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	3,658		(12,041)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Net increase in short-term loans		90,000		25,000
Net (decrease) increase in short-term loans						Net (decrease) increase in short-term loans	(60,000)		30,000
Repayment of term loan borrowings	Repayment of term loan borrowings	(8,750)		(4,375)		Repayment of term loan borrowings	(13,125)		(8,750)
Share repurchases	Share repurchases	0		(125,000)		Share repurchases	0		(175,000)
Proceeds from employee stock purchase plan	Proceeds from employee stock purchase plan	2,144		1,830		Proceeds from employee stock purchase plan	4,012		3,368
Proceeds from exercise of stock options	Proceeds from exercise of stock options	1,259		6,046		Proceeds from exercise of stock options	3,838		7,712
Other	Other	(20)		72		Other	(32)		90
Net cash provided by (used in) financing activities		84,633		(96,427)
Net cash used in financing activities						Net cash used in financing activities	(65,307)		(142,580)
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	6,082		(124)
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	51,691		(42,934)
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	137,311		169,351
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	$	189,002	$	126,417
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	$	6,070	$	10,739
Income taxes paid	Income taxes paid	$	4,099	$	8,535	Income taxes paid	$	5,612	$	9,888
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	$	5,878	$	10,705

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~~nine months ended ~~September~~December 26, 2020 are not necessarily indicative of the results that may be expected for the full fiscal year ending April 3, 2021 or any other interim period. The Company has assessed its ability to continue as a going concern. As of ~~September~~December 26, 2020, the Company has concluded that substantial doubt about its ability to continue as a going concern does not exist. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the annual report on Form 10-K for the fiscal year ended March 28, 2020.

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Refer to Note ~~11,~~4, ~~Notes Payable and Long-term Debt~~Acquisitions, for information pertaining to ~~a payment made on the Company's revolving credit facility~~acquisitions that ~~occurred~~were signed or closed subsequent to ~~September~~December 26, 2020. There were no other material recognized or unrecognized subsequent events as of or for the ~~six~~three and nine months ended ~~September~~December 26, 2020.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Standards Implemented

In June 2016, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued Accounting Standards Codification ~~("ASC"~~(“ASC”) Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326). ASC Update No. 2016-13 is intended 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. The Company adopted ASC Update No. 2016-13 during the first quarter of fiscal 2021. The adoption did not have a material impact on the Company's unaudited condensed consolidated financial statements.

In August 2018, the FASB issued ASC Update No. 2018-15, Intangibles, Goodwill and Other - Internal-Use Software (Subtopic 350-40). The new guidance aligns the accounting implementation costs incurred in a cloud computing arrangement that is a service contract with the accounting for internal-use software licenses. The Company adopted ASC Update No. 2018-15 during the first quarter of fiscal 2021. The adoption did not have a material impact on the Company's unaudited condensed consolidated financial statements.

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 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 to improve operational performance and reduce cost principally in our manufacturing and supply chain operations. The Company estimates that it 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~~nine months ended ~~September~~December 26, 2020, the Company incurred ~~$4.4~~$3.1 million and ~~$8.0~~$11.1 million, respectively, of restructuring and turnaround costs under this program. During ~~both~~ the three and ~~six~~nine months ended ~~September~~December 28, 2019, the Company incurred ~~$2.9~~$3.9 million and $6.8 million, respectively, of restructuring and turnaround costs under this program. Total cumulative charges under this program are ~~$19.8~~$22.9 million.

During fiscal 2018, the Company launched a Complexity Reduction Initiative (the ~~"2018 Program"~~“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~~December 26, 2020, the Company incurred minimal charges of restructuring and turnaround costs under this program. During the ~~six~~nine months ended ~~September~~December 26, 2020, the Company incurred $0.5 million of restructuring and turnaround costs under this program. During the three and ~~six~~nine months ended ~~September~~December 28, 2019, the Company incurred ~~$0.9~~$3.9 million and ~~$2.9~~$6.8 million, respectively, of restructuring and turnaround costs under this program. Total cumulative charges under this program are $58.7 million. The 2018 Program is substantially complete.

The following table summarizes the activity for restructuring reserves related to the 2020 Program and the 2018 Program and prior programs for the ~~six~~nine months ended ~~September~~December 26, 2020, 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		2018 Program and Prior Programs		Total
Balance at March 28, 2020	Balance at March 28, 2020	$	1,136	$	1,512	$	2,648	Balance at March 28, 2020	$	1,136	$	1,512	$	2,648
Costs incurred, net of reversals	Costs incurred, net of reversals	1,100		(108)		992		Costs incurred, net of reversals	1,005		(105)		900
Payments	Payments	(1,145)		(815)		(1,960)		Payments	(1,546)		(887)		(2,433)

Balance at September 26, 2020		$	1,091	$	589	$	1,680
Balance at December 26, 2020								Balance at December 26, 2020	$	595	$	520	$	1,115

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


		Three Months Ended				Six Months Ended					Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Cost of goods sold	Cost of goods sold	$	(236)	$	283	$	267	$	442	Cost of goods sold	$	(49)	$	2	$	218	$	444
Research and development	Research and development	(209)		555		110		569		Research and development	(2)		139		108		708
Selling, general and administrative expenses	Selling, general and administrative expenses	372		505		615		1,301		Selling, general and administrative expenses	(41)		476		574		1,777
		$	(73)	$	1,343	$	992	$	2,312		$	(92)	$	617	$	900	$	2,929

As of ~~September~~December 26, 2020, the Company had a restructuring liability of ~~$1.7~~$1.1 million, of which ~~$1.2~~$0.7 million is payable within the next twelve months.

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

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


Restructuring costs	Restructuring costs	Three Months Ended				Six Months Ended				Restructuring costs	Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Plasma	Plasma	$	(87)	$	395	$	481	$	548	Plasma	$	(27)	$	4	$	454	$	552
Blood Center	Blood Center	20		94		174		136		Blood Center	66		18		240		154
Hospital	Hospital	(147)		34		(18)		237		Hospital	0		58		(18)		295
Corporate	Corporate	141		820		355		1,391		Corporate	(131)		537		224		1,928
Total	Total	$	(73)	$	1,343	$	992	$	2,312	Total	$	(92)	$	617	$	900	$	2,929

Turnaround costs	Turnaround costs	Three Months Ended				Six Months Ended				Turnaround costs	Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Plasma	Plasma	$	804	$	31	$	804	$	79	Plasma	$	431	$	108	$	1,235	$	187
Blood Center	Blood Center	490		0		506		0		Blood Center	518		293		1,024		293
Hospital	Hospital	1		0		10		0		Hospital	4		0		14		0
Corporate	Corporate	3,218		2,383		6,128		3,393		Corporate	2,282		6,780		8,410		10,173
Total	Total	$	4,513	$	2,414	$	7,448	$	3,472	Total	$	3,235	$	7,181	$	10,683	$	10,653

Total restructuring and turnaround costs	Total restructuring and turnaround costs	$	4,440	$	3,757	$	8,440	$	5,784	Total restructuring and turnaround costs	$	3,143	$	7,798	$	11,583	$	13,582

4. ~~ACQUISITION~~ACQUISITIONS

Cardiva Medical, Inc.

On January 17, 2021, the Company entered into an Agreement and Plan of Merger with Cardiva Medical, Inc., (“Cardiva”), an industry-leading manufacturer of vascular closure systems based in Santa Clara, California. In connection with this acquisition, the Company will pay upfront consideration of $475.0 million in cash, subject to customary working capital and certain other adjustments as of the closing of the transaction, as well as up to $35.0 million in additional contingent consideration payable over the next two years based on sales growth. The transaction is not subject to a financing contingency, and the Company expects to finance the transaction through a combination of its cash on hand, revolving credit facility and an additional $150.0 million term loan anticipated to be borrowed under its existing credit facility. The transaction is expected to close in the fourth quarter of fiscal 2021.

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

HAS Intellectual Property

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

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

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~~nine months of fiscal 2021:


(In thousands)	~~September~~December 26, 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
Net assets acquired	$	16,606

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)	Amount		Weighted-Average Amortization Period
Completed technology	$	13,441	10
Customer relationships	347		10
Trademark	302		10
Total	$	14,090	10

Acquisition-Related Costs

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

Unaudited Pro Forma Financial Information

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

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 million gain upon closing of the transaction in the second quarter of fiscal 2021 and toan additional $1.5 million gain in the third quarter of fiscal 2021. To the extent the additional contingent consideration is earned and realized in a future period then such amounts will be recorded as additional gains in such future period. The Company also agreed to provide certain transition services to GPI, generally for a period of one to nine months depending on the nature of the service.

Inlog Holdings France

On September 18, 2020, the Company sold its wholly-owned subsidiary Inlog Holdings France SAS to Abénex Capital ("(“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~~

$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 accounts receivable, $0.3 million 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 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~~nine months ended ~~September~~December 26, 2020, the Company reported income tax expense of ~~$6.9~~$5.5 million and ~~$4.3~~$9.8 million, respectively, representing effective tax rates of ~~12.5%~~14.7% and ~~6.8%~~9.8%, respectively. The effective tax rate for the three and ~~six~~nine months ended ~~September~~December 26, 2020 includes discrete tax benefits recognized from excess stock compensation deductions of ~~$0.1~~$1.0 million and ~~$4.1~~$5.1 million, respectively. The effective tax rates were also impacted by the jurisdictional mix of earnings including divestiture transactions. During the ~~three and six~~nine months ended ~~September~~December 26, 2020, the Company sold its Fajardo, Puerto Rico manufacturing operations, certain U.S. blood donor management software solution assets, and its wholly-owned subsidiary Inlog Holdings France SAS. 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, for information pertaining to these divestitures.

For the three and ~~six~~nine months ended ~~September~~December 28, 2019, the Company reported an income tax provision of ~~$7.6~~$7.9 million and ~~a benefit of $1.6~~$6.3 million, respectively, representing effective tax rates of ~~16.9%~~21.0% and ~~(6.0)%~~9.6%, respectively. The effective tax rate

for the ~~six~~nine months ended ~~September~~December 28, 2019 was lower than the U.S. statutory tax rate primarily due to a discrete tax benefit recognized from excess stock compensation deductions of ~~$4.4~~$3.1 million and ~~$9.3~~$12.4 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				Nine 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)	December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Basic EPS	Basic EPS									Basic EPS
Net income	Net income	$	48,101	$	37,486	$	58,628	$	29,007	Net income	$	31,882	$	29,895	$	90,510	$	58,902
Weighted average shares	Weighted average shares	50,696		50,791		50,557		50,901		Weighted average shares	50,789		50,630		50,634		50,810
Basic income per share	Basic income per share	$	0.95	$	0.74	$	1.16	$	0.57	Basic income per share	$	0.63	$	0.59	$	1.79	$	1.16
Diluted EPS	Diluted EPS									Diluted EPS
Net income	Net income	$	48,101	$	37,486	$	58,628	$	29,007	Net income	$	31,882	$	29,895	$	90,510	$	58,902
Basic weighted average shares	Basic weighted average shares	50,696		50,791		50,557		50,901		Basic weighted average shares	50,789		50,630		50,634		50,810
Net effect of common stock equivalents	Net effect of common stock equivalents	397		1,255		613		1,273		Net effect of common stock equivalents	574		1,008		600		1,185
Diluted weighted average shares	Diluted weighted average shares	51,093		52,046		51,170		52,174		Diluted weighted average shares	51,363		51,638		51,234		51,995
Diluted income per share	Diluted income per share	$	0.94	$	0.72	$	1.15	$	0.56	Diluted income per share	$	0.62	$	0.58	$	1.77	$	1.13

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. For the three and ~~six~~nine months ended ~~September~~December 26, 2020, weighted average shares outstanding, assuming dilution, excludes the impact of ~~0.8~~0.4 million and 0.6 million anti-dilutive shares, respectively. For both the three and ~~six~~nine months ended ~~September~~December 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~~December 26, 2020, the Company had ~~$19.1~~$17.9 million of its transaction price allocated to remaining performance obligations related to executed contracts with an original duration of one year or more. The Company expects to recognize approximately ~~61%~~59% 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. 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~~December 26, 2020 and March 28, 2020, the Company had contract assets of ~~$6.7~~$5.4 million and $5.0 million, respectively. The change is primarily due to the delay in billings compared to the revenue recognized. Contract assets are classified as other current assets and other long-term assets on the condensed consolidated balance sheets.

As of ~~September~~December 26, 2020 and March 28, 2020, the Company had contract liabilities of ~~$17.5~~$16.7 million and $20.8 million, respectively. During the three and ~~six~~nine months ended ~~September~~December 26, 2020, the Company recognized ~~$4.8~~$2.5 million and ~~$13.7~~$16.3 million, respectively, of revenue that was included in the above March 28, 2020 contract liability balance. Contract liabilities decreased by an additional $2.5 million during the three and ~~six~~nine months ended ~~September~~December 26, 2020 as a result of the sale of certain U.S. blood donor management software solution assets and the Company's wholly-owned subsidiary Inlog Holdings France SAS. 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)	December 26, 2020		March 28, 2020
Raw materials	Raw materials	$	82,349	$	76,867	Raw materials	$	74,437	$	76,867
Work-in-process	Work-in-process	13,890		11,021		Work-in-process	22,030		11,021
Finished goods	Finished goods	208,985		182,388		Finished goods	203,243		182,388
Total inventories	Total inventories	$	305,224	$	270,276	Total inventories	$	299,710	$	270,276

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 the third quarter of 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

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, 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~~December 26, 2020, ~~$315.0~~$310.6 million was outstanding under the Term Loan with an effective interest rate of 1.4% ~~and~~ ~~$150.0 million~~ ~~was~~. 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 million of uncommitted operating lines of credit to fund its global operations under which there were 0 outstanding borrowings as of ~~September~~December 26, 2020.

The Company has required scheduled principal payments of ~~$13.1~~$8.7 million during the remainder of fiscal 2021, $17.5 million during fiscal 2022, $214.4 million during fiscal 2023 and $70.0 million during fiscal 2024.

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

12. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The Company manufactures, markets and sells its products globally. During the three and ~~six~~nine months ended ~~September~~December 26, 2020, ~~40.8%~~38.6% and ~~42.0%~~40.7%, respectively, of the Company's sales were generated outside the U.S., generally in foreign currencies. The Company also incurs certain manufacturing, marketing and selling costs in international markets in local currency.

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~~December 26, 2020 and March 28, 2020 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~~$78.8 million as of ~~September~~December 26, 2020 and $93.8 million as of March 28, 2020. At ~~September~~December 26, 2020, a ~~gain~~loss of ~~$1.6~~$1.4 million, net of tax, will be reclassified to earnings within the next twelve months. Substantially all currency cash flow hedges outstanding as of ~~September~~December 26, 2020 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~~$90.5 million as of ~~September~~December 26, 2020 and $98.0 million as of March 28, 2020.

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~~nine months ended ~~September~~December 26, 2020, a gain of ~~$2.2~~$0.3 million, net of tax, was recorded in accumulated other comprehensive loss to recognize the effective portion of the fair value of the Swaps that qualify as cash flow hedges.

Trade Receivables

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				Nine Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Beginning balance	Beginning balance	$	3,446	$	3,624	$	3,824	$	3,937	Beginning balance	$	2,699	$	4,108	$	3,824	$	3,937
Credit (gain) loss	Credit (gain) loss	(483)		586		(742)		286		Credit (gain) loss	(95)		229		(838)		515
Write-offs	Write-offs	(264)		(102)		(383)		(115)		Write-offs	(79)		(240)		(461)		(355)
Ending balance	Ending balance	$	2,699	$	4,108	$	2,699	$	4,108	Ending balance	$	2,525	$	4,097	$	2,525	$	4,097

Fair Value of Derivative Instruments

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


(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 Income and Comprehensive Income	Amount of Gain (Loss) Excluded from Effectiveness Testing		Location in Condensed Consolidated Statements of Income and Comprehensive 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	$	1,378	$	(1,538)	Net revenues, COGS and SG&A	$	(671)	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		$	(5,218)	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	$	(2,996)	$	(3,326)	Interest and other expense, net	$	0

The Company did not have fair value hedges or net investment hedges outstanding as of ~~September~~December 26, 2020 or March 28, 2020. As of ~~September~~December 26, 2020, 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~~December 26, 2020, the Company has classified its derivative

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

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


(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				December 26, 2020			March 28, 2020
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		$	191	$	839
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		69		377

				$	478		$	1,216					$	260	$	1,216
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		$	919	$	1,854
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		206		1,435
Designated interest rate swaps	Designated interest rate swaps	Other current liabilities		6,134			5,581		Designated interest rate swaps		Other current liabilities		5,697		5,581
Designated interest rate swaps	Designated interest rate swaps	Other long-term liabilities		7,521			9,475		Designated interest rate swaps		Other long-term liabilities		6,323		9,475
				$	14,867		$	18,345					$	13,145	$	18,345

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~~December 26, 2020 and March 28, 2020.


		As of September 26, 2020									As of December 26, 2020
(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	$	79,773	$	0	$	—	$	79,773
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	0		67		—		67		Designated foreign currency hedge contracts	0		191		—		191
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		411		—		411		Non-designated foreign currency hedge contracts	0		69		—		69

		$	167,175	$	478	$	—	$	167,653		$	79,773	$	260	$	—	$	80,033
Liabilities	Liabilities									Liabilities
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	$	0	$	989	$	—	$	989	Designated foreign currency hedge contracts	$	0	$	919	$	—	$	919
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		223		—		223		Non-designated foreign currency hedge contracts	0		206		—		206
Designated interest rate swaps	Designated interest rate swaps	0		13,655		—		13,655		Designated interest rate swaps	0		12,020		—		12,020
Contingent consideration	Contingent consideration	—		—		3,920		3,920		Contingent consideration	—		—		3,920		3,920
		$	0	$	14,867	$	3,920	$	18,787		$	0	$	13,145	$	3,920	$	17,065

		As of March 28, 2020									As of March 28, 2020
		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	$	44,564	$	0	$	—	$	44,564
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	0		839		—		839		Designated foreign currency hedge contracts	0		839		—		839
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		377		—		377		Non-designated foreign currency hedge contracts	0		377		—		377

		$	44,564	$	1,216	$	—	$	45,780		$	44,564	$	1,216	$	—	$	45,780
Liabilities	Liabilities									Liabilities
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	$	0	$	1,854	$	—	$	1,854	Designated foreign currency hedge contracts	$	0	$	1,854	$	—	$	1,854
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		1,435		—		1,435		Non-designated foreign currency hedge contracts	0		1,435		—		1,435
Designated interest rate swaps	Designated interest rate swaps	0		15,056		—		15,056		Designated interest rate swaps	0		15,056		—		15,056
		$	0	$	18,345	$	—	$	18,345		$	0	$	18,345	$	—	$	18,345

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)

December 26, 2020

Technique

Input

Range

Revenue-based payments

1,920

Discounted cash flow

Discount rate

8.5%

Revenue-based payments

1,920

Discounted cash flow

Discount rate

8.5%

Projected year of payment

2021 - 2023

Projected year of payment

2021 - 2023

Regulatory-based payment

2,000

Discounted cash flow

Discount rate

4.9%

Regulatory-based payment

2,000

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~~December 26, 2020, the maximum potential contingent consideration that the Company could be required to pay is $4.5 million. The fair value of contingent consideration associated with acquisitions was $3.9 million at ~~September~~December 26, 2020. As of ~~September~~December 26, 2020, $0.5 million was included in other ~~current~~ liabilities and $3.4 million was included in other long-term liabilities on the condensed consolidated balance sheet.

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


(In thousands)
Balance at March 28, 2020	$	0
Acquisition date fair value of contingent consideration	3,920
Change in fair value	—
Balance at ~~September~~December 26, 2020	$	3,920

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

Following the reorganization, 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~~non-

recurring or non-operational are excluded from segment operating income because management evaluates the operating results of the segments excluding such items. These items include restructuring and turnaround costs, deal amortization, gains on divestitures and sale of assets, asset impairments and other related charges, accelerated depreciation and related costs, costs related to compliance with the European Union Medical Device Regulation, transaction costs and certain legal charges. Although these amounts are excluded from segment operating income, as applicable, they are included in the reconciliations

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				Nine Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Net revenues	Net revenues									Net revenues
Plasma	Plasma	$	78,718	$	116,381	$	147,433	$	227,144	Plasma	$	102,154	$	120,997	$	249,587	$	348,141
Blood Center	Blood Center	74,715		83,667		154,029		161,663		Blood Center	80,417		85,314		234,446		246,977
Hospital	Hospital	51,022		49,662		96,593		96,849		Hospital	52,334		50,753		148,927		147,602
Net revenues by business unit	Net revenues by business unit	204,455		249,710		398,055		485,656		Net revenues by business unit	234,905		257,064		632,960		742,720
Service (1)	Service (1)	5,342		5,276		10,424		10,142		Service (1)	4,972		5,197		15,396		15,339
Effect of exchange rates	Effect of exchange rates	(311)		(2,420)		(3,416)		(4,781)		Effect of exchange rates	494		(3,291)		(2,922)		(8,072)
Net revenues	Net revenues	$	209,486	$	252,566	$	405,063	$	491,017	Net revenues	$	240,371	$	258,970	$	645,434	$	749,987
(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				Nine Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Segment operating income	Segment operating income									Segment operating income
Plasma	Plasma	$	40,823	$	56,776	$	77,173	$	110,501	Plasma	$	52,673	$	59,343	$	129,846	$	169,844
Blood Center	Blood Center	33,757		41,208		72,502		78,927		Blood Center	36,424		42,197		108,926		121,124
Hospital	Hospital	21,459		20,851		39,242		39,767		Hospital	22,430		20,593		61,672		60,360
Segment operating income	Segment operating income	96,039		118,835		188,917		229,195		Segment operating income	111,527		122,133		300,444		351,328
Corporate expenses (1)	Corporate expenses (1)	(56,741)		(63,580)		(121,803)		(125,283)		Corporate expenses (1)	(63,202)		(63,080)		(185,005)		(188,363)
Effect of exchange rates	Effect of exchange rates	3,647		2,501		4,358		5,270		Effect of exchange rates	4,286		2,521		8,644		7,791
Deal amortization	Deal amortization	(8,136)		(5,935)		(16,399)		(11,909)		Deal amortization	(7,805)		(5,772)		(24,204)		(17,681)
Restructuring and turnaround costs	Restructuring and turnaround costs	(4,440)		(3,757)		(8,440)		(5,784)		Restructuring and turnaround costs	(3,143)		(7,798)		(11,583)		(13,582)
Transaction costs	Transaction costs	(1,773)		0		(3,063)		0		Transaction costs	0		0		(3,063)		0
PCS2 accelerated depreciation and related costs	PCS2 accelerated depreciation and related costs	(644)		(6,534)		(2,186)		(12,062)		PCS2 accelerated depreciation and related costs	(1,146)		(6,649)		(3,332)		(18,708)
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	(1,207)		(448)		(2,696)		(304)
Impairment of assets and other related charges	Impairment of assets and other related charges	68		(54)		(896)		(51,220)		Impairment of assets and other related charges	0		0		(896)		(51,220)
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	1,115		0		32,613		8,083
Operating income	Operating income	$	58,782	$	49,739	$	70,497	$	36,437	Operating income	$	40,425	$	40,907	$	110,922	$	77,344
(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.

1921

Net revenues by product line are as follows:


		Three Months Ended				Six Months Ended					Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Plasma products and services	Plasma products and services	$	97,710	$	135,849	$	186,423	$	265,594	Plasma products and services	$	123,510	$	141,231	$	309,933	$	406,825
Blood Center products and services	Blood Center products and services	59,233		65,615		119,900		125,522		Blood Center products and services	62,787		66,126		182,687		191,648
Hospital products and services	Hospital products and services	52,543		51,102		98,740		99,901		Hospital products and services	54,074		51,613		152,814		151,514
Net revenues	Net revenues	$	209,486	$	252,566	$	405,063	$	491,017	Net revenues	$	240,371	$	258,970	$	645,434	$	749,987

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				Nine Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(In thousands)	December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
United States	United States	$	123,984	$	161,880	$	234,993	$	318,255	United States	$	147,607	$	167,238	$	382,600	$	485,493
Japan	Japan	19,645		20,376		36,476		35,843		Japan	20,854		19,268		57,330		55,111
Europe	Europe	38,648		38,074		81,667		74,827		Europe	41,874		40,984		123,541		115,811
Asia	Asia	26,168		30,192		48,552		58,833		Asia	29,050		29,436		77,602		88,269
Other	Other	1,041		2,044		3,375		3,259		Other	986		2,044		4,361		5,303
Net revenues	Net revenues	$	209,486	$	252,566	$	405,063	$	491,017	Net revenues	$	240,371	$	258,970	$	645,434	$	749,987

15. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of Accumulated Other Comprehensive Loss are as follows:


(In thousands)	(In thousands)	Foreign Currency		Defined Benefit Plans		Net Unrealized Gain/Loss on Derivatives		Total		(In thousands)	Foreign Currency		Defined Benefit Plans		Net Unrealized Gain/Loss on Derivatives		Total
Balance as of March 28, 2020	Balance as of March 28, 2020	$	(31,100)	$	(209)	$	(13,826)	$	(45,135)	Balance as of March 28, 2020	$	(31,100)	$	(209)	$	(13,826)	$	(45,135)
Other comprehensive income (loss) before reclassifications(1)	Other comprehensive income (loss) before reclassifications(1)	5,345		0		(1,588)		3,757		Other comprehensive income (loss) before reclassifications(1)	12,031		0		(1,618)		10,413
Amounts reclassified from Accumulated Other Comprehensive Loss(1)	Amounts reclassified from Accumulated Other Comprehensive Loss(1)	0		0		2,906		2,906		Amounts reclassified from Accumulated Other Comprehensive Loss(1)	0		0		4,864		4,864
Net current period other comprehensive income	Net current period other comprehensive income	5,345		0		1,318		6,663		Net current period other comprehensive income	12,031		0		3,246		15,277
Balance as of September 26, 2020		$	(25,755)	$	(209)	$	(12,508)	$	(38,472)
Balance as of December 26, 2020										Balance as of December 26, 2020	$	(19,069)	$	(209)	$	(10,580)	$	(29,858)
(1) Presented net of income taxes, the amounts of which are insignificant.	(1) Presented net of income taxes, the amounts of which are insignificant.									(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. 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 products and solutions to customers to help improve patient care and reduce the cost of healthcare. Our technology addresses important medical markets including 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.

2022

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 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.

We believe that Plasma and Hospital have growth potential, while Blood Center competes in challenging markets which 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

Acquisitions

~~Persona~~
TM

Cardiva Medical, Inc.

On ~~October 2, 2020,~~January 17, 2021, we ~~received~~entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Cardiva Medical, Inc., (“Cardiva”), an industry-leading manufacturer of vascular closure systems based in Santa Clara, California. In connection with this acquisition, we will pay upfront consideration of $475.0 million in cash, subject to customary working capital and certain other adjustments as of the closing of the transaction, as well as up to $35.0 million in additional contingent consideration payable over the next two years based on sales growth. The transaction is not subject to a financing contingency, and we expect to finance the transaction through a combination of our cash on hand, revolving credit facility and an additional $150.0 million term loan anticipated to be borrowed under our existing credit facility. The transaction is expected to close in the fourth quarter of fiscal 2021.

Cardiva’s portfolio includes two catheter-based vascular access site closure devices. The VASCADE® vascular closure system is designed for “small-bore” femoral arterial and venous closure, generally used in interventional cardiology and peripheral vascular procedures. The VASCADE MVP® vascular closure system is designed for “mid-bore” multi-access femoral venous closure, generally used in electrophysiology procedures, and is the only U.S. Food and Drug Administration ~~("FDA"~~(“FDA”) ~~510(k) clearance~~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 our ~~NexSys PCS®~~Hospital business unit includes products with Persona technology. NexSys PCS with Persona technology uses a percent plasma nomogram that customizes plasma collection based on an individual donor's body composition. The new, proprietary Persona technology strengthensdemonstrated benefits and enhances penetration into the ~~NexSys PCS value proposition~~large and ~~reinforces our commitment to supporting the plasma industry.~~growing interventional cardiology and electrophysiology markets.

~~COVID-19~~HAS Intellectual Property

In January 2021, we 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. We ~~continue~~previously entered into exclusive manufacturing and distribution agreements with HemoAssay pursuant to ~~closely manage~~which we have exclusive rights to commercialize HemoAssay’s HAS devices in China. In connection with the ~~impacts~~transaction, we have agreed to pay up to $15.0 million to HemoAssay in contingent consideration based on certain developmental and manufacturing based milestones. These products augment our portfolio of hemostasis analyzers within the ~~COVID-19 pandemic on our~~Hospital business results of operations and financial condition. The progression of the COVID-19 pandemic during the first half of fiscal 2021 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.unit.

Our priorities continue to be the safety of our employees, 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~~enicor GmbH

On April 1, 2020, we acquired 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.

Refer to Note 4, ~~Acquisition,~~Acquisitions, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information.

PersonaTM

On October 2, 2020, we received FDA 510(k) clearance for our NexSys PCS® with Persona technology. NexSys PCS with Persona technology uses a percent plasma nomogram that customizes plasma collection based on an individual donor's body composition. The new, proprietary Persona technology strengthens the NexSys PCS value proposition and reinforces our commitment to supporting the plasma industry.

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 fiscal 2021 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 while continuing to invest in growth opportunities. Our manufacturing and supply chain remain operational without significant disruptions and we continue to operate in all of our markets.

Divestitures

Fajardo, Puerto Rico Manufacturing Operations

On June 29, 2020, we sold our 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 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~~a $13.2 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 ("(“Abé~~nex"~~nex”), 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"~~“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~~nine months ended ~~September~~December 26, 2020, we incurred ~~$4.4~~$3.1 million and ~~$8.0~~$11.1 million, respectively, of restructuring and turnaround costs under this program.

Financial Summary


		Three Months Ended								Six Months Ended									Three Months Ended								Nine 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)	December 26, 2020			December 28, 2019			% Increase/ (Decrease)		December 26, 2020			December 28, 2019			% Increase/ (Decrease)
Net revenues	Net revenues	$	209,486		$	252,566		(17.1)	%	$	405,063		$	491,017		(17.5)	%	Net revenues	$	240,371		$	258,970		(7.2)	%	$	645,434		$	749,987		(13.9)	%
Gross profit	Gross profit	$	105,744		$	127,000		(16.7)	%	$	195,774		$	242,906		(19.4)	%	Gross profit	$	120,257		$	128,050		(6.1)	%	$	316,031		$	370,956		(14.8)	%
% of net revenues	% of net revenues	50.5		%	50.3		%			48.3		%	49.5		%			% of net revenues	50.0		%	49.4		%			49.0		%	49.5		%
Operating expenses	Operating expenses	$	46,962		$	77,261		(39.2)	%	$	125,277		$	206,469		(39.3)	%	Operating expenses	$	79,832		$	87,143		(8.4)	%	$	205,109		$	293,612		(30.1)	%
Operating income	Operating income	$	58,782		$	49,739		18.2	%	$	70,497		$	36,437		93.5	%	Operating income	$	40,425		$	40,907		(1.2)	%	$	110,922		$	77,344		43.4	%
% of net revenues	% of net revenues	28.1		%	19.7		%			17.4		%	7.4		%			% of net revenues	16.8		%	15.8		%			17.2		%	10.3		%
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	$	(3,051)		$	(3,078)		(0.9)	%	$	(10,612)		$	(12,152)		(12.7)	%
Income before provision for income taxes	Income before provision for income taxes	$	54,956		$	45,088		21.9	%	$	62,936		$	27,363		n/m		Income before provision for income taxes	$	37,374		$	37,829		(1.2)	%	$	100,310		$	65,192		53.9	%
Provision (benefit) for income taxes		$	6,855		$	7,602		(9.8)	%	$	4,308		$	(1,644)		n/m
Provision for income taxes																		Provision for income taxes	$	5,492		$	7,934		(30.8)	%	$	9,800		$	6,290		55.8	%
% of pre-tax income	% of pre-tax income	12.5		%	16.9		%			6.8		%	(6.0)		%			% of pre-tax income	14.7		%	21.0		%			9.8		%	9.6		%
Net income	Net income	$	48,101		$	37,486		28.3	%	$	58,628		$	29,007		n/m		Net income	$	31,882		$	29,895		6.6	%	$	90,510		$	58,902		53.7	%
% of net revenues	% of net revenues	23.0		%	14.8		%			14.5		%	5.9		%			% of net revenues	13.3		%	11.5		%			14.0		%	7.9		%
Net income per share - basic	Net income per share - basic	$	0.95		$	0.74		28.4	%	$	1.16		$	0.57		n/m		Net income per share - basic	$	0.63		$	0.59		6.8	%	$	1.79		$	1.16		54.3	%
Net income per share - diluted	Net income per share - diluted	$	0.94		$	0.72		30.6	%	$	1.15		$	0.56		n/m		Net income per share - diluted	$	0.62		$	0.58		6.9	%	$	1.77		$	1.13		56.6	%

Net revenues decreased ~~17.1%~~7.2% and ~~17.5%~~13.9% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. Without the effect of foreign exchange, net revenues decreased ~~17.7%~~8.5% and ~~17.6%~~14.5% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. Revenue decreases in Plasma due to the COVID-19 pandemic primarily drove the overall decrease in revenue during the three and ~~six~~nine months ended ~~September~~December 26, 2020.

Operating income ~~increased~~decreased during the three months ended ~~September~~December 26, 2020, as compared with the same period of fiscal 2020, due to the gains on divestitures and incremental 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. Operating income increased during the nine months ended December 26, 2020, as compared with the same period of fiscal 2020, due to the gains on divestitures, incremental savings from the 2020 Program and the absence of impairment charges associated with the divestiture of our plasma liquid solutions operations in the prior year.

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)	December 26, 2020		December 28, 2019		Reported growth		Currency impact		Constant currency growth (1)
United States	United States	$	123,984	$	161,880	(23.4)	%	—	%	(23.4)	%	United States	$	147,608	$	167,238	(11.7)	%	—	%	(11.7)	%
International	International	85,502		90,686		(5.7)	%	2.1	%	(7.8)	%	International	92,763		91,732		1.1	%	4.0	%	(2.9)	%
Net revenues	Net revenues	$	209,486	$	252,566	(17.1)	%	0.6	%	(17.7)	%	Net revenues	$	240,371	$	258,970	(7.2)	%	1.3	%	(8.5)	%

(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											Nine Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		Reported growth		Currency impact		Constant currency growth (1)		(In thousands)	December 26, 2020		December 28, 2019		Reported growth		Currency impact		Constant currency growth (1)
United States	United States	$	234,993	$	318,255	(26.2)	%	—	%	(26.2)	%	United States	$	382,601	$	485,493	(21.2)	%	—	%	(21.2)	%
International	International	170,070		172,762		(1.6)	%	0.7	%	(2.3)	%	International	262,833		264,494		(0.6)	%	2.6	%	(3.2)	%
Net revenues	Net revenues	$	405,063	$	491,017	(17.5)	%	0.1	%	(17.6)	%	Net revenues	$	645,434	$	749,987	(13.9)	%	0.6	%	(14.5)	%

Our principal operations are in the U.S, Europe, Japan and other parts of Asia. Our products are marketed in approximately 85 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%~~38.6% and ~~42.0%~~40.7%, respectively, of total net revenues during the three and ~~six~~nine months ended ~~September~~December 26, 2020, as compared with ~~35.9%~~35.4% and ~~35.2%~~35.3%, respectively, during the three and ~~six~~nine months ended ~~September~~December 28, 2019. 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.

2326

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)	December 26, 2020		December 28, 2019		Reported growth		Currency impact		Constant currency growth (1)
Plasma	Plasma	$	78,408	$	115,925	(32.4)	%	—	%	(32.4)	%	Plasma	$	101,934	$	120,420	(15.4)	%	0.2	%	(15.6)	%
Blood Center	Blood Center	74,913		81,982		(8.6)	%	2.1	%	(10.7)	%	Blood Center	80,920		83,411		(3.0)	%	2.7	%	(5.7)	%
Hospital (2)	Hospital (2)	50,978		49,702		2.6	%	(0.1)	%	2.7	%	Hospital (2)	52,651		50,266		4.7	%	1.6	%	3.1	%
Service	Service	5,187		4,957		4.6	%	3.3	%	1.3	%	Service	4,866		4,873		(0.1)	%	4.2	%	(4.3)	%
Net revenues	Net revenues	$	209,486	$	252,566	(17.1)	%	0.6	%	(17.7)	%	Net revenues	$	240,371	$	258,970	(7.2)	%	1.3	%	(8.5)	%

(2) Hospital revenue includes Hemostasis Management revenue of ~~$26.0~~$28.5 million and ~~$24.8~~$24.7 million during the three months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019, respectively. Hemostasis Management revenue increased ~~4.9%~~15.2% in the ~~second~~third quarter of fiscal 2021, as compared with the same period of fiscal 2020. Without the effect of foreign exchange, Hemostasis Management revenue increased ~~5.6%~~14.2% in the ~~second~~third quarter of fiscal 2021, as compared with the same period of fiscal 2020.


		Six Months Ended											Nine Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		Reported growth		Currency impact		Constant currency growth (1)		(In thousands)	December 26, 2020		December 28, 2019		Reported growth		Currency impact		Constant currency growth (1)
Plasma	Plasma	$	146,619	$	226,347	(35.2)	%	(0.1)	%	(35.1)	%	Plasma	$	248,553	$	346,767	(28.3)	%	—	%	(28.3)	%
Blood Center	Blood Center	152,702		157,785		(3.2)	%	1.5	%	(4.7)	%	Blood Center	233,622		241,196		(3.1)	%	2.0	%	(5.1)	%
Hospital (2)	Hospital (2)	95,817		97,399		(1.6)	%	(1.3)	%	(0.3)	%	Hospital (2)	148,468		147,665		0.5	%	(0.4)	%	0.9	%
Service	Service	9,925		9,486		4.6	%	1.8	%	2.8	%	Service	14,791		14,359		3.0	%	2.6	%	0.4	%
Net revenues	Net revenues	$	405,063	$	491,017	(17.5)	%	0.1	%	(17.6)	%	Net revenues	$	645,434	$	749,987	(13.9)	%	0.6	%	(14.5)	%

(2) Hospital revenue includes Hemostasis Management revenue of ~~$50.0~~$78.5 million and ~~$49.2~~$73.9 million during the ~~six~~nine months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019, respectively. Hemostasis Management revenue increased ~~1.7%~~6.2% in the first ~~six~~nine 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%~~7.7% in the first ~~six~~nine months of fiscal 2021, as compared with the same period of fiscal 2020.

Plasma

Plasma revenue decreased ~~32.4%~~15.4% and ~~35.2%~~28.3% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. Without the effect of foreign exchange, Plasma revenue decreased ~~32.4%~~15.6% and ~~35.1%~~28.3% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. This revenue decrease during the three and ~~six~~nine months ended ~~September~~December 26, 2020 was driven by a decline in the volume of plasma disposables, primarily in the U.S., due to the COVID-19 pandemic 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~~nine months ended ~~September~~December 26, 2020.

While we experienced ~~slight~~growth rate improvements during the three months ended ~~September~~December 26, 2020 compared with the ~~prior~~second quarter of fiscal 2021, the timing of plasma collection recovery remains uncertain and we anticipate a continued negative impact from COVID-19 on our fiscal 2021 Plasma results. ~~The timing~~We continue to view the impacts of the pandemic on 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 the future, we anticipate that the recovery of plasma collection volumes will be protracted. Wetemporary and 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.

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Blood Center

Blood Center revenue decreased ~~8.6%~~3.0% and ~~3.2%~~3.1% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. Without the effect of foreign exchange, Blood Center revenue decreased ~~10.7%~~5.7% and ~~4.7%~~5.1% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. ~~The decrease during the three and six months ended September 26, 2020 was~~These decreases were primarily driven by continued declines in whole blood disposables and the divestiture of certain blood donor management software solution assets, partially offset by increases in apheresis revenue, asincluding distributor stocking orders in the first quarter of fiscal 2021, despite certain customers ~~converted~~conversions to alternative sources of supply. The expected impact of the loss of this apheresis business is an incremental revenue decline of approximately ~~$17~~$17.0 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.

While 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, 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%~~4.7% and ~~decreased 1.6%~~0.5% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. Without the effect of foreign exchange, Hospital revenue increased ~~2.7%~~3.1% and ~~decreased 0.3%~~0.9% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. The increase during the three and nine months ended ~~September~~December 26, 2020 was primarily due to an increase in TEG disposables revenue in the U.S. and ~~Transfusion Management growth~~equipment sales in ~~Europe,~~Europe. These increases were partially offset by declines in Cell ~~Salvage.~~Salvage revenue. The ~~decrease~~divestiture of certain blood bank and hospital software solution assets also contributed to the decline during the ~~six~~three months ended ~~September~~December 26, ~~2020 was primarily due to a decline in Cell Salvage revenue as a result of the COVID-19 pandemic, partially offset by increases in Transfusion Management and Hemostasis Management sales.~~2020.

During the ~~six~~nine months ended ~~September~~December 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,~~ However, we had consistent improvement in the second ~~quarter~~and third quarters 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.~~volume. 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 fiscal year.~~in future periods.

Gross Profit


		Three Months Ended								Six Months Ended									Three Months Ended								Nine Months Ended
(In thousands)	(In thousands)	September 26, 2020			September 28, 2019			% Increase/ (Decrease)		September 26, 2020			September 28, 2019			% Increase/ (Decrease)		(In thousands)	December 26, 2020			December 28, 2019			% Increase/ (Decrease)		December 26, 2020			December 28, 2019			% Increase/ (Decrease)
Gross profit	Gross profit	$	105,744		$	127,000		(16.7)	%	$	195,774		$	242,906		(19.4)	%	Gross profit	$	120,257		$	128,050		(6.1)	%	$	316,031		$	370,956		(14.8)	%
% of net revenues	% of net revenues	50.5		%	50.3		%			48.3		%	49.5		%			% of net revenues	50.0		%	49.4		%			49.0		%	49.5		%

Gross profit decreased ~~16.7%~~6.1% and ~~19.4%~~14.8% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. Without the effect of foreign exchange, gross profit decreased ~~18.3%~~8.4% and ~~19.3%~~15.6% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. The decrease in gross profit margin during the three and ~~six~~nine months ended ~~September~~December 26, 2020 was primarily driven by decreased volumes,

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~~sales volume,~~ unfavorable product mix, ~~and~~ higher operational costs ~~as a result~~and the impact of the COVID-19 ~~pandemic.~~pandemic and recent divestitures. The decline was partially offset by ~~lower depreciation expense and~~ productivity savings from the 2020 ~~Program.~~Program and lower depreciation expense.

Operating Expenses


		Three Months Ended								Six Months Ended									Three Months Ended								Nine Months Ended
(In thousands)	(In thousands)	September 26, 2020			September 28, 2019			% Increase/ (Decrease)		September 26, 2020			September 28, 2019			% Increase/ (Decrease)		(In thousands)	December 26, 2020			December 28, 2019			% Increase/ (Decrease)		December 26, 2020			December 28, 2019			% Increase/ (Decrease)
Research and development	Research and development	$	6,763		$	7,422		(8.9)	%	$	14,513		$	14,909		(2.7)	%	Research and development	$	7,501		$	7,000		7.2	%	$	22,014		$	21,909		0.5	%
% of net revenues	% of net revenues	3.2		%	2.9		%			3.6		%	3.0		%			% of net revenues	3.1		%	2.7		%			3.4		%	2.9		%
Selling, general and administrative	Selling, general and administrative	$	71,697		$	77,922		(8.0)	%	$	141,234		$	150,922		(6.4)	%	Selling, general and administrative	$	73,446		$	78,267		(6.2)	%	$	214,680		$	229,189		(6.3)	%
% of net revenues	% of net revenues	34.2		%	30.9		%			34.9		%	30.7		%			% of net revenues	30.6		%	30.2		%			33.3		%	30.6		%
Impairment of assets	Impairment of assets	$	—		$	—		—	%	$	1,028		$	48,721		(97.9)	%	Impairment of assets	$	—		$	1,876		(100.0)	%	$	1,028		$	50,597		(98.0)	%
% of net revenues	% of net revenues	—		%	—		%			0.3		%	9.9		%			% of net revenues	—		%	0.7		%			0.2		%	6.7		%
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	$	(1,115)		$	—		n/m		$	(32,613)		$	(8,083)		n/m
% of net revenues	% of net revenues	(15.0)		%	(3.2)		%			(7.8)		%	(1.6)		%			% of net revenues	(0.5)		%	—		%			(5.1)		%	(1.1)		%
Total operating expenses	Total operating expenses	$	46,962		$	77,261		(39.2)	%	$	125,277		$	206,469		(39.3)	%	Total operating expenses	$	79,832		$	87,143		(8.4)	%	$	205,109		$	293,612		(30.1)	%
% of net revenues	% of net revenues	22.4		%	30.6		%			30.9		%	42.0		%			% of net revenues	33.2		%	33.6		%			31.8		%	39.1		%

Research and Development

Research and development expenses ~~decreased 8.9%~~increased 7.2% and ~~2.7%~~0.5% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. Without the effect of foreign exchange, research and development expenses ~~decreased 9.0%~~increased 6.9% and ~~2.3%~~0.6% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. The ~~decrease~~increase during the three and ~~six~~nine months ended ~~September~~December 26, 2020 was ~~driven~~due to continued investments, primarily in our Hospital Business unit as well as increased spend related to a recent acquisition. The increases were partially offset by cost savings primarily related to the 2020 ~~Program, partially offset by continued investments, primarily in our Hospital Business unit.~~Program.

Selling, General and Administrative

Selling, general and administrative expenses decreased ~~8.0%~~6.2% and ~~6.4%~~6.3% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. Without the effect of foreign exchange, selling, general, and administrative expenses decreased ~~8.3%~~7.3% and ~~6.2%~~6.5% during the three and ~~six~~nine months ended ~~September~~December 26, 2020, respectively, as compared with the same periods of fiscal 2020. ~~The decrease during the three and six months ended September 26, 2020 was~~These decreases were due to ~~a reduction in variable compensation,~~ cost containment actions taken to offset the negative effects related to the COVID-19 pandemic, a reduction in variable compensation and incremental productivity savings from the 2020 Program. These decreases were partially offset by continued investments and higher transaction costs.

Impairment of assets

We recognized impairment charges of $1.0 million during the ~~six~~nine months ended ~~September~~December 26, 2020 in connection with the sale of our Fajardo, Puerto Rico, manufacturing operations. There were no impairments recognized during the three months ended December 26, 2020. During the ~~six~~nine months ended ~~September~~December 28, 2019 we recognized ~~$48.7~~$50.6 million of impairment charges primarily in connection with the sale of our Union, South Carolina facility. ~~There were no impairments recognized during~~During the three months ended ~~September 26, 2020 and September~~December 28, ~~2019.~~2019, we recognized an additional $1.9 million of other asset impairments.

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Gains on divestitures

We recognized gains on divestitures of ~~$31.5~~$1.1 million and $32.6 million, respectively, during the three and ~~six~~nine months ended ~~September~~December 26, 2020. 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 gains on sale of assets of $8.1 million during the ~~three and six~~nine months ended ~~September~~December 28, 2019 due to the sale of assets associated with our Braintree corporate headquarters. There were no gains on sale of assets during the three months ended December 28, 2019.

Interest and Other Expense, Net

Interest expense from 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~~nine months ended ~~September~~December 26, 2020, our interest expense associated with this debt declined by ~~$2.0~~$1.6 million and ~~$3.2~~$4.8 million, respectively, despite higher loan balances in the current year period due to a decrease in the effective interest rate. The effective interest rate on total debt outstanding as of ~~September~~December 26, 2020 was 1.4%.

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~~nine months ended ~~September~~December 26, 2020, we reported income tax expense of ~~$6.9~~$5.5 million and ~~$4.3~~$9.8 million, respectively, representing effective tax rates of ~~12.5%~~14.7% and ~~6.8%~~9.8%, respectively. The effective tax rate for the three and ~~six~~nine months ended ~~September~~December 26, 2020 includes discrete tax benefits recognized from excess stock compensation deductions of ~~$0.1~~$1.0 million and ~~$4.1~~$5.1 million, respectively. The effective tax rates were also impacted by the jurisdictional mix of earnings including divestiture transactions. During the three and ~~six~~nine months ended ~~September~~December 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~~nine months ended ~~September~~December 28, 2019, we reported an income tax provision of ~~$7.6~~$7.9 million and ~~a benefit of $1.6~~$6.3 million, respectively, representing effective tax rates of ~~16.9%~~21.0% and ~~(6.0)%~~9.6%, respectively. The effective tax rate for the three and ~~six~~nine months ended ~~September~~December 28, 2019 was lower than the U.S. statutory tax rate primarily due to a discrete tax benefit recognized from excess stock compensation deductions of ~~$4.4~~$3.1 million and ~~$9.3~~$12.4 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.

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)	December 26, 2020		March 28, 2020
Cash & cash equivalents	Cash & cash equivalents	$	279,169	$	137,311	Cash & cash equivalents	$	189,002	$	137,311
Working capital	Working capital	$	421,711	$	328,817	Working capital	$	473,964	$	328,817
Current ratio	Current ratio	2.2		2.2		Current ratio	3.4		2.2
Net debt(1)	Net debt(1)	$	(184,848)	$	(245,182)	Net debt(1)	$	(120,774)	$	(245,182)
Days sales outstanding (DSO)	Days sales outstanding (DSO)	61		62		Days sales outstanding (DSO)	55		62
Inventory turnover	Inventory turnover	1.2		1.7		Inventory turnover	1.3		1.7

(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~~nine months ended ~~September~~December 26, 2020, we incurred ~~$4.4~~$3.1 million and ~~$8.0~~$11.1 million, respectively, of restructuring and turnaround costs under this program.

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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 of the NexSys PCS and ~~Plasma plant capacity expansions,~~the build out of our new manufacturing facility in Clinton, PA, cash payments under the loan agreement and restructuring and turnaround initiatives.

As of ~~September~~December 26, 2020, we had ~~$279.2~~$189.0 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, 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~~December 26, 2020, ~~$315.0~~$310.6 million was outstanding under the term loan with an effective interest rate of 1.4% ~~and $150.0 million was~~. 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 million of uncommitted operating lines of credit to fund our global operations under which there were no outstanding borrowings as of ~~September~~December 26, 2020. We expect to finance the Cardiva acquisition through a combination of cash on hand, revolving credit facility and an additional $150.0 million term loan under our existing credit facility. The transaction is expected to close in the fourth quarter of fiscal 2021.

We have scheduled principal payments of ~~$13.1~~$8.7 million required during the remainder of fiscal ~~2020.~~2021. 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~~December 26, 2020.

In May 2019, our Board of Directors authorized the repurchase of up to $500.0 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 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~~Our capital allocation strategy continues to ~~invest in our business with a bias towards~~prioritize organic ~~growth~~investments followed by inorganic opportunities and ~~innovation that will continue to expand our commercial capabilities.~~share repurchases. 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.

In May 2019, our Board of Directors authorized the repurchase of up to $500.0 million of Haemonetics common shares over the next two years. As of December 26, 2020, the total remaining authorization for repurchases of the Company's common stock under the share repurchase program was $325.0 million. We do not expect to make additional share repurchases prior to the expiration of the share repurchase program in May 2021.

Cash Flows


		Six Months Ended							Nine Months Ended
(In thousands)	(In thousands)	September 26, 2020		September 28, 2019		Increase/ (Decrease)		(In thousands)	December 26, 2020		December 28, 2019		Increase/ (Decrease)
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	$	107,258	$	111,811	$	(4,553)
Investing activities	Investing activities	13,239		7,825		5,414		Investing activities	3,658		(12,041)		15,699
Financing activities	Financing activities	84,633		(96,427)		181,060		Financing activities	(65,307)		(142,580)		77,273
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)	6,082		(124)		6,206
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	$	51,691	$	(42,934)

(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 operating activities ~~increased~~decreased by ~~$8.4~~$4.6 million during the ~~six~~nine months ended ~~September~~December 26, 2020, as compared with the ~~six~~nine months ended ~~September~~December 28, 2019. The ~~increase~~decrease in cash provided by operating activities was primarily the result of a reduction in net income, as adjusted for depreciation, amortization and other non-cash charges compared with the prior year period. A decrease in working capital as compared with the prior year period due to lower inventory growth, primarily related to NexSys PCS devices, a ~~decrease~~decline in the build of accounts receivable due to lower sales and improved collection timing, and 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.~~decrease.

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Net cash provided by investing activities increased by ~~$5.4~~$15.7 million during the ~~six~~nine months ended ~~September~~December 26, 2020, as compared with the ~~six~~nine months ended ~~September~~December 28, 2019. The increase in cash ~~used in~~provided by investing activities was primarily the result of cash received ~~related to 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.~~from divestitures. This was partially offset by the cash paid for ~~the~~an acquisition ~~of enicor~~ during fiscal 2021 and proceeds received related to the divestiture of our plasma liquid solutions operations and Braintree headquarter facility in the prior year ~~period.~~period, as well as a reduction in capital expenditures.

Net cash ~~provided by~~used in financing activities ~~increased~~decreased by ~~$181.1~~$77.3 million during the ~~six~~nine months ended ~~September~~December 26, 2020, as compared with the ~~six~~nine months ended ~~September~~December 28, 2019, primarily due to a decrease in share repurchases compared with the prior year period, ~~and an increase~~partially offset by a reduction in borrowings on our revolving credit facility, net of payments, during fiscal 2021.

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~~nine months ended ~~September~~December 26, 2020, ~~40.8%~~38.6% and ~~42.0%~~40.7%, respectively, 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

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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 May 2020,the Securities and Exchange Commission (“SEC”) issued a final rule that amends the financial statement requirements for acquisitions and dispositions of businesses. The amendments primarily relate to disclosures required by Rule 3-05 and Article 11 of Regulation S-X and modifies the tests provided in Rule 1-02(w) of Regulation S-X used to determine whether a subsidiary or an acquired or disposed business is significant and modifies the number of years of audited financial statements required for acquisitions with significance levels greater than specified percentages. The amendments are effective for annual periods beginning after January 1, 2021 but early adoption is permitted. We plan to early adopt the amendments during the fourth quarter of fiscal 2021.

In December 2019, the ~~Financial Accounting Standards Board ("FASB")~~FASB issued ~~Accounting Standards Codification ("ASC")~~ASC Update No. 2019-12, Income Taxes (Topic 740). The new guidance will improve consistent application of and simplify the accounting for income taxes by removing certain exceptions to the general principals in Topic 740. ASC Update No. 2019-12 is effective for annual periods beginning after December 15, 2020, and is applicable to us in fiscal 2022. 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 Report on Form 10-Q 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,” “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 of planned acquisitions or ~~dispositions;~~dispositions, including the Company's pending acquisition of Cardiva; 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.

•The effect of the ongoing COVID-19 pandemic, or outbreaks of communicable diseases, on our business, financial conditions and results of operations, which may be heightened if the pandemic and various government responses to it continue for an extended period of time;

•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 cost containment, including the continued consolidation among health care 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 and distribution;

•Our ability to develop new products or enhancements on commercially acceptable terms or at all;

•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 the Company's pending 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

•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, and similar laws in other jurisdictions, as well as U.S. and foreign export and import restrictions and tariffs;

•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, including from the increased amount of debt we anticipate incurring to fund our pending acquisition of Cardiva, and raise additional capital when ~~desire~~desired 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.

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~~$12.0 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~~$13.7 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~~December 26, 2020 was ~~$315.0~~$310.6 million with an interest rate of 1.4% based on prevailing LIBOR rates. An increase of 100 basis points in LIBOR rates would result in additional annual interest expense of ~~$1.0~~$0.8 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~~December 26, 2020, 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~~December 26, 2020.

Changes in Internal Control Over Financial Reporting

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

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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.

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 the ~~six~~nine months ended ~~September~~December 26, 2020. The total remaining authorization for repurchases of our common stock under the share repurchase program was $325 million as of ~~September~~December 26, 2020. We do not expect to make additional share repurchases prior to the expiration of the share repurchase program in May 2021.

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Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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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).

10.1			First Amendment to Industrial Lease Agreement, dated as of October 1, 2020, by and between Clinton Commerce III, LLC and the Company.

10.2			Twelfth Amendment to Agreement of Lease, dated as of May 22, 2020, by and between The Buncher Company and the Company.*

10.3			Thirteenth Amendment to Agreement of Lease, dated as of December 21, 2020, by and between The Buncher Company and the Company.*

10.4			Agreement and Plan of Merger, dated as of January 17, 2021, by and among the Company, Concordia Merger Sub, Inc., Cardiva Medical, Inc. and Fortis Advisors LLC, as the Seller Representative.*

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~~December 26, 2020, formatted in inline Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Statements of Income and Comprehensive 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).

_____________________________




*
						Certain portions of this exhibit are considered confidential and have been omitted as permitted under SEC rules and regulations.
**						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.

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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~~February 2, 2021	By:	/s/ Christopher A. Simon
		Christopher A. Simon, President and Chief Executive Officer
		(Principal Executive Officer)

~~November 4, 2020~~February 2, 2021	By:	/s/ William Burke
		William Burke, Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)

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