Haemonetics
Annual Report 2017

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended April 1, 2017Commission file number 001-14041HAEMONETICS CORPORATION(Exact name of registrant as specified in its charter)Massachusetts 04-2882273(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) 400 Wood Road,Braintree, Massachusetts 02184-9114 (Address of principal executive offices) (781) 848-7100 (Registrant’s telephone number)Securities registered pursuant to Section 12(b) of the Act:(Title of Each Class) (Name of Exchange on Which Registered)Common stock, $.01 par value per share New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No oIndicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No þIndicate 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 preceding12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to the filing requirements for at least the past90 days. Yes þ No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted 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 andpost such files). Yes þ No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this form 10-K. oIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growthcompany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.(Check one):Large accelerated filer þ Accelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company) Smaller reporting company o Emerging growth company oIf 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 financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.). Yes o No þThe aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant (assuming for these purposes that all executive officers anddirectors are “affiliates” of the registrant) as of October 1, 2016, the last business day of the registrant’s most recently completed second fiscal quarter was $1,866,084,197 (basedon the closing sale price of the registrant’s common stock on that date as reported on the New York Stock Exchange).The number of shares of $0.01 par value common stock outstanding as of May 19, 2017 was 52,464,290.Documents Incorporated By ReferencePortions of the definitive proxy statement for our Annual Meeting of Shareholders to be held on July 27, 2017 are incorporated by reference in Part III of this report.TABLE OF CONTENTS PageNumberItem 1.Business1Item 1A.Risk Factors10Item 1B.Unresolved Staff Comments17Item 2.Properties17Item 3.Legal Proceedings18Item 4.Mine Safety Disclosures19Item 4A.Executive Officers19Item 5.Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities20Item 6.Selected Consolidated Financial Data21Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations22Item 7A.Quantitative and Qualitative Disclosures about Market Risk41Item 8.Financial Statements and Supplementary Data43Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure84Item 9A.Control and Procedures84Item 9B.Other Information87Item 10.Directors and Executive Officers of the Registrant and Corporate Governance87Item 11.Executive Compensation87Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters87Item 13.Certain Relationships and Related Transactions and Director Independence87Item 14.Principal Accounting Fees and Services87Item 15.Exhibits, Financial Statement Schedules88Table of ContentsITEM 1. BUSINESSCompany OverviewHaemonetics is a global healthcare company dedicated to providing a suite of innovative hematology products and solutions to customers to help themimprove patient care and reduce the cost of healthcare. Our technology addresses important medical markets, including blood and plasma componentcollection, the surgical suite, and hospital transfusion services. When used in this report, the terms “we,” “us,” “our” and “the Company” mean Haemonetics.Haemonetics was founded in 1971 as a medical device company and is a pioneer and market leader in developing and manufacturing automated bloodcomponent collection devices and surgical blood salvage devices.Blood and its components (plasma, platelets, and red cells) have many vital and frequently life-saving clinical applications. Plasma is used for patients withmajor blood loss and is manufactured into biopharmaceuticals to treat a variety of illnesses, including immune diseases and coagulation disorders. Red cellstreat trauma patients or patients undergoing surgery with high blood loss, such as open heart surgery or organ transplant. Platelets have many uses in patientcare, including supporting cancer patients undergoing chemotherapy. Blood is essential to a modern healthcare system.Haemonetics develops and markets a wide range of devices and solutions to serve our customers. We provide plasma collection systems and software whichenable plasma fractionators to make life saving pharmaceuticals. We provide analytical devices for measuring hemostasis which enable healthcare providersto better manage their patients’ bleeding risk. Haemonetics makes blood processing systems and software which make blood donation more efficient andtrack life giving blood components. Finally, Haemonetics supplies systems and software which facilitate blood transfusions and cell processing.Market and ProductsProduct LinesIn fiscal 2017, we organized our products into four categories for purposes of evaluating and developing their growth potential: Plasma, HemostasisManagement, Blood Center and Cell Processing. For that purpose, “Plasma” included plasma collection devices and disposables, plasma donor managementsoftware, and anticoagulant and saline sold to plasma customers. “Hemostasis Management” included devices and methodologies for measuring coagulationcharacteristics of blood, such as our TEG® Hemostasis Analyzer. “Blood Center” included blood collection and processing devices and disposables for redcells, platelets and whole blood as well as related donor management software. “Cell Processing” included surgical blood salvage systems, specialized bloodcell processing systems, disposables and blood transfusion management software.We believe that Plasma and Hemostasis Management have the greatest growth potential, while Cell Processing innovation offers an opportunity to increasemarket share and expand into new segments. Blood Center competes in challenging markets which require us to manage the business differently, includingreducing costs, shrinking the scope of the current product line, and evaluating opportunities to exit unfavorable customer contracts. We are progressingtoward a streamlined operating model with a management and cost structure that can bring about sustainable productivity improvement across theorganization. Overall implementation of our new model began in fiscal 2017 and will continue into fiscal 2018 and 2019.•PlasmaThe Plasma Collection Market for Fractionation — Human plasma is collected and processed by biopharmaceutical companies into therapeuticand diagnostic products that aid in the treatment of immune diseases and coagulation disorders. While plasma is also used to aid patients withextreme blood loss, such as trauma victims, biopharmaceutical companies solely focus on the pharmaceutical uses of plasma.Many biopharmaceutical companies are vertically integrated and are now collecting and fractionating the plasma required to manufacturepharmaceuticals. The vertical integration of these customers paved the way for highly efficient plasma supply chain management and leveraginginformation technology to manage operations from the point of plasma donation to fractionation to the production of the final product.Haemonetics' Plasma Products — Built around our automated plasma collection devices and related disposables, our portfolio of products andservices is designed to support multiple facets of plasma collector operations. We have a long-standing commitment to understanding our customers'collection and manufacturing processes. As a result, we aim to design equipment that is durable, dependable, and easy to use, and providecomprehensive training and support to our plasma collection customers.1Table of ContentsToday, the vast majority of plasma collections worldwide are performed using automated collection technology because it is safer and more cost-effective. With our PCS® (Plasma Collection System) brand automated plasma collection technology, more plasma can be collected during any onedonation event because the other blood components are returned to the donor through the sterile disposable sets used for the plasma donationprocedure.We offer multiple products necessary for plasma collection and storage, including PCS® brand plasma collection equipment and disposables, plasmacollection containers and intravenous solutions. We also offer a portfolio of integrated information technology platforms for plasma customers tomanage their donors, operations, and supply chain. Our software products automate the donor interview and qualification process, streamline theworkflow process in the plasma center, provide the controls necessary to evaluate donor suitability, determine the ability to release units collected,and manage unit distribution. With our software solutions, plasma collectors can manage processes across the plasma supply chain, react quickly tobusiness changes, and implement opportunities to reduce costs.In April, 2017, we submitted a new plasmapheresis device, the PCS® 300, for 510(k) regulatory clearance with the United States Food and DrugAdministration ("FDA") and continue to work on future enhancements to this important product, some of which may require additional clearances.Our Plasma business unit represented 46.4%, 42.0%, and 38.8% of our total revenue in fiscal 2017, 2016 and 2015, respectively.•HospitalHemostasis ManagementThe Hemostasis Management Market — Hemostasis refers to a patient's ability to form and maintain blood clots. Hemostasis Management plays arole in various medical procedures including liver transplant, cardiovascular procedures, trauma and percutaneous coronary intervention (PCI). Byunderstanding a patient’s clotting ability, clinicians can better plan for the patient’s care, deciding in advance whether to start or discontinue use ofcertain drugs or determine the likelihood of the patient's need for a transfusion and which blood components will be most effective in minimizingblood loss and reducing clotting risk. Such planning supports better care, which can lead to lower hospital costs through a reduction in unnecessarydonor blood transfusions, reduced adverse transfusion reactions, and shorter intensive care unit and hospital stays.Haemonetics’ Hemostasis Management Products — We have two device platforms which we market to hospitals and laboratories as an alternativeto less comprehensive blood tests: the TEG® 5000 analyzer, which we acquired in the 2007 acquisition of Haemoscope Corporation, and the TEG®6s device, which we license from Cora Healthcare, Inc., a company established by Haemoscope's founders. Under the license from Cora Healthcare,we have exclusive rights to manufacture and commercialize TEG® 6s in hospitals and hospital laboratory fields.Both of our TEG® systems are blood diagnostic instruments that measure a patient's hemostasis. This information enables caregivers to decide thebest blood-related clinical treatment for the patient in order to minimize blood loss and reduce clotting risk. The TEG® 5000 analyzer is approvedfor a broad set of indications in all of our markets. The TEG® 6s and TEG® Manager are approved for the same set of indications as the TEG® 5000 inEurope, Australia and Japan. In the U.S., TEG® 6s is approved for limited indications, including cardiovascular surgery and cardiology. We arepursuing a broader set of indications for the TEG® 6s in the U.S., including trauma.Our Hemostasis Management business unit represented 7.5%, 6.5%, and 5.6% of our total revenue in fiscal 2017, 2016 and 2015, respectively.Cell ProcessingThe Cell Processing Market — Loss of blood is common in many surgical procedures, including open heart, trauma, transplant, vascular, andorthopedic procedures, and the need for transfusion of oxygen-carrying red cells to make up for lost blood volume is routine. Patients commonlyreceive donor blood which carries various risks, including transfusion with the wrong blood type, transfusion of a blood-borne disease or infectiousagent, transfusion reactions including death, but more commonly chills, fevers or other side effects that can prolong a patient’s recovery.An alternative to allogeneic blood is surgical cell salvage, also known as autotransfusion, which reduces or eliminates a patient’s need for blooddonated from others and ensures that the patient receives the freshest and safest blood possible — his or her own. Surgical cell salvage involves thecollection of a patient’s own blood during or after surgery for reinfusion of red cells to that patient. Blood is suctioned from the surgical site orcollected from a wound or chest drain, processed and washed through a centrifuge-based system that yields concentrated red cells available fortransfusion back to the patient. This process occurs in a sterile, closed-circuit, single-use consumable set that is fitted2Table of Contentsinto an electromechanical device. We market our surgical blood salvage products to surgical specialists, primarily cardiovascular, orthopedic, andtrauma surgeons, and to surgical suite service providers.In recent years, more efficient blood use and less invasive cardiovascular surgeries have reduced demand for autotransfusion in these procedures andcontributed to intense competition in mature markets, while increased access to healthcare in emerging economies has provided new markets andsources of growth.Orthopedic procedures have seen similar to the changes with improved blood management practices, including the use of tranexamic acid to treatand prevent post-operative bleeding, have significantly reduced the number of transfusions and autotransfusion.Haemonetics’ Cell Processing Products — Haemonetics offers a range of solutions that improve a hospital's systems for acquiring blood, storing itin the hospital, and dispensing it efficiently and correctly. Over the last few years, hospitals have become increasingly focused on of their need tocontrol costs and improve patient safety by managing blood more effectively. Our products and integrated solution platforms help hospitalsoptimize performance of blood acquisition, storage, and distribution.The Cell Saver® system is a surgical blood salvage system targeted to procedures that involve mid to high-volume blood loss, such as cardiovascularor orthopedic surgeries. It has become the standard of care for these surgeries. The Cell Saver® Elite® system is our most advanced autotransfusionoption to minimize allogeneic blood use for surgeries with medium to high blood loss.The OrthoPAT® surgical blood salvage system is targeted to orthopedic procedures, such as hip and knee replacements, which involve slower, lowervolume blood loss that often occurs well after surgery. The system is designed to remain with the patient following surgery, to recover blood andproduce a washed red cell product for autotransfusion.Our Cell Processing software products help hospitals track and safely deliver stored blood products. SafeTrace Tx® is our software solution that helpsmanage blood product inventory, perform patient cross-matching, and manage transfusions. In addition, our BloodTrack® suite of solutions managestracking and control of blood products from the hospital blood center through transfusion to the patient.Our Cell Processing business unit represented 11.9%, 12.4%, and 13.2% of our total revenue in fiscal 2017, 2016 and 2015, respectively.•Blood CenterThe Blood Center Market — There are millions of blood donations throughout the world every year that produce blood products for transfusion tosurgical, trauma, or chronically ill patients. Patients typically receive only the blood components necessary to treat a particular clinical condition.Platelet therapy is frequently used to alleviate the effects of chemotherapy and help patients with bleeding disorders and to stop bleeding. Red cellsare often transfused to patients to replace blood lost during surgery. Red cells are also transfused to patients with blood disorders, such as sickle cellanemia or aplastic anemia. Plasma, in addition to its role in creating life-saving pharmaceuticals, is frequently transfused to replace blood volume intrauma victims and surgical patients.The demand for blood components varies across the world. While overall we expect total demand to remain stable, demand in individual marketscan vary greatly. Highly populated emerging market countries are seeing demand growth as they expand healthcare coverage. As greater numbers ofpeople gain access to more advanced medical treatment, demand for blood components, plasma-derived drugs, and surgical procedures increases. Inmore mature markets, the development of less invasive procedures with lower associated blood loss and better blood management have offset thedemand increases from aging populations.Most donations worldwide are manual whole blood donations. In this process, whole blood is collected from the donor and then transported to alaboratory where it is separated into its components: red cells, platelets and/or plasma.In addition to manual collections, there is a significant market for automated component blood collections. In this procedure, the blood separationprocess is automated and occurs in real-time while a person is donating blood. In this separation method, only the specific blood componenttargeted is collected, and the remaining components are returned to the blood donor. Automated blood component collection allows significantlymore of the targeted blood component to be collected during a donation event.Haemonetics’ Blood Center Products — Today, Haemonetics offers automated blood component and manual whole blood collection systems toblood collection centers to collect blood products efficiently and cost effectively.3Table of ContentsWe market the MCS® (Multicomponent Collection System) brand apheresis equipment which is designed to collect specific blood componentsintegrated from the donor. Utilizing the MCS® automated platelet collection protocols, blood centers collect one or more therapeutic “doses” ofplatelets during a single donation. The MCS® two-unit protocol or double red cell collection device helps blood collectors optimize the collectionof red cells by automating the blood separation function, eliminating the need for laboratory processing, and enabling the collection of two units ofred cells from a single donor thus maximizing the amount of red cells collected per eligible donor and helping to mitigate red cell shortages incountries where this problem exists. Blood collectors can also use the MCS® system to collect one unit of red cells and a "jumbo" (double) unit ofplasma, or one unit of red cells and one unit of platelets from a single donor. The MCS® plasma protocol, which provides the possibility ofcollecting 600-800ml of plasma for either transfusion to patients or for use by the pharmaceutical industry, completes the comprehensive portfolioof different blood component collection options on this device.Haemonetics also offers a portfolio of products for manual whole blood collection and processing. Haemonetics' portfolio of disposable whole bloodcollection and component storage sets offer flexibility in collecting a unit of whole blood and the subsequent production and storage of the redblood cell, platelet or plasma products, including options for in-line or dockable filters for leukoreduction of any blood component.With the ACP® (Automated Cell Processor) brand, Haemonetics offers a solution to automate the washing and freezing of red cell components. Theautomated red cell washing procedure removes plasma proteins within the red cell units to provide a safer product for transfusion to frequentlytransfused patients, neonates, or patients with a history of transfusion reactions. The automated glycerolization and deglycerolization steps arerequired to prepare red cells for frozen storage. Freezing the red cell units can expand the shelf life of these products up to 10 years. Customersutilize this technology to implement strategic red cell inventories for large scale catastrophes, storage of rare blood types, or enhanced inventorymanagement.Blood Center software solutions help blood center collectors improve efficiencies of blood collection and supply and help ensure donor safety. Thisincludes solutions for blood drive planning, donor recruitment and retention, blood collection, component manufacturing and distribution. Ourproducts SafeTrace® and El Dorado Donor® donation and blood unit management systems span blood center operations and automate and trackoperations from the recruitment of the blood donor to the disposition of the blood product. Our Hemasphere® software solution provides support formore efficient blood drive planning, and Donor Doc® and e-Donor® software help to improve recruitment and retention.Our Blood Center business unit represented 34.3%, 39.1%, and 42.4% of our total revenue in fiscal 2017, 2016 and 2015, respectively.Although we address our customers' needs through multiple product lines, we manage our business as five operating segments based primarily on geography:(a) North America Plasma, (b) Americas Blood Center and Hospital, (c) Europe, Middle East and Africa (collectively "EMEA"), (d) Asia Pacific and (e) Japan.The North America Plasma reporting unit is a separate operating segment with dedicated segment management due the size and scale of the Plasma businessunit.For financial reporting purposes, we aggregate our five operating segments into four reportable segments which include:•Japan•EMEA•North America Plasma•All Other4Table of ContentsWe have aggregated the Americas Blood Center and Hospital and Asia - Pacific operating segments into the All Other reportable segment based upon theirsimilar operational and economic characteristics, including similarity of operating margin.Segment AssetsOur assets by segment are set forth below:(In thousands)April 1, 2017 April 2, 2016 March 28, 2015Japan$91,346 $129,551 $146,765EMEA259,863 249,504 305,540North America Plasma313,934 453,212 467,249All Other573,566 486,861 565,863Total assets$1,238,709 $1,319,128 $1,485,417The financial information required for segments is included herein in Note 14, Segment Information, to our consolidated financial statements contained inItem 8 of this Annual Report on Form 10-K.Marketing/Sales/DistributionWe market and sell our products to biopharmaceutical companies, blood collection groups and independent blood centers, hospitals and hospital serviceproviders, group purchasing organizations and national health organizations through our own direct sales force (including full-time sales representatives andclinical specialists) as well as independent distributors. Sales representatives target the primary decision-makers within each of those organizations.United StatesIn fiscal 2017, 2016 and 2015, 59.0%, 57.2%, and 54.4%, respectively, of consolidated net revenues were generated in the U.S., where we primarily use adirect sales force to sell our products. See Note 14, Segment Information, to our consolidated financial statements contained in Item 8 of this Annual Reporton Form 10-K for additional information.Outside the United StatesIn fiscal 2017, 2016 and 2015, 41.0%, 42.8%, and 45.6%, respectively, of consolidated net revenues were generated through sales to non-U.S. customers.Outside the United States, we use a combination of direct sales force and distributors. See Note 14, Segment Information, to our consolidated financialstatements contained in Item 8 of this Annual Report on Form 10-K for additional information.Research and DevelopmentOur research and development centers in the United States and Switzerland ensure that protocol variations are incorporated to closely match local customerrequirements. In addition, Haemonetics maintains software development operations in Canada and France.Customer collaborations are also an important part of our technical strength and competitive advantage. These collaborations with customers and transfusionexperts provide us with ideas for new products and applications, enhanced protocols, and potential test sites as well as objective evaluations and expertopinions regarding technical and performance issues.The development of blood component separation products, hemostasis analyzers, and software has required us to maintain technical expertise in variousengineering disciplines, including mechanical, electrical, software, and biomedical engineering and material science. Innovations resulting from thesevarious engineering efforts enable us to develop systems that are faster, smaller, and more user-friendly, or that incorporate additional features important toour customer base.In fiscal 2017, research and development resources were primarily allocated to supporting next generation plasma collection and software systems. We willcontinue to invest resources in clinical programs for our Hemostasis Management business unit, most notably a global registry study for our TEG® platform.ManufacturingOur principal manufacturing operations are located in the United States, Mexico, and Malaysia.In general, our production activities occur in controlled settings or “clean room” environments. Each step of the manufacturing and assembly process isquality checked, qualified, and validated. Critical process steps and materials are documented to ensure that every unit is produced consistently and meetsperformance requirements. Our equipment and disposable manufacturing5Table of Contentssites are certified to the ISO 13485 standard and to the Medical Device Directive allowing placement of the CE mark of conformity.Plastics are the principal component of our disposable products. Contracts with our suppliers help mitigate some of the short-term effects of price volatility inthis market. However, increases in the price of petroleum derivatives could result in corresponding increases in our costs to procure plastic raw materials.Contractors manufacture some component sets, equipment, and liquid solutions according to our specifications. We maintain important relationships withtwo Japanese manufacturers that produce finished disposables in Singapore, Japan, and Thailand. We have also engaged Sanmina Corporation to be the solemanufacturer of certain equipment. Certain parts and components are purchased from sole source vendors. We believe that, if necessary, alternative sources ofsupply are available in most cases, and could be secured within a relatively short period of time. Nevertheless, an interruption in supply could temporarilyinterfere with production schedules and affect our operations.Our equipment is designed in-house and assembled by us or our contracted manufacturers from components that are manufactured to our specifications. Thecompleted instruments are programmed, calibrated, and tested to ensure compliance with our engineering and quality assurance specifications. Inspectionchecks are conducted throughout the manufacturing process to verify proper assembly and functionality. When mechanical and electronic components aresourced from outside vendors, those vendors must meet detailed qualification and process control requirements.Intellectual PropertyWe consider our intellectual property rights to be important to our business. We rely on patent, trademark, copyright, and trade secret laws, as well asprovisions in our agreements with third parties, to protect our intellectual property rights. We hold patents in the United States and many internationaljurisdictions on some of our machines, processes, disposables and related technologies. These patents cover certain elements of our systems, includingprotocols employed in our equipment and certain aspects of our processing chambers and disposables. Our patents may cover current products, products inmarkets we plan to enter, or products in markets we plan to license, or the patents may be defensive in that they are directed to technologies not currentlyembodied in our current products. We may also license patent rights from third parties that cover technologies that we plan to use in our business. Tomaintain our competitive position, we rely on the technical expertise and know-how of our personnel and on our patent rights. We pursue an active andformal program of invention disclosure and patent application in both the United States and foreign jurisdictions. We own various trademarks that have beenregistered in the United States and certain other countries.Our policy is to obtain patent and trademark rights in the U.S. and foreign countries where such rights are available and we believe it is commerciallyadvantageous to do so. However, the standards for international protection of intellectual property vary widely. We cannot assure that pending patent andtrademark applications will result in issued patents and registered trademarks, that patents issued to or licensed by us will not be challenged or circumventedby competitors, or that our patents will not be determined invalid.CompetitionTo remain competitive, we must continue to develop and acquire new cost-effective products, information technology platforms, and business services. Webelieve that our ability to maintain a competitive advantage will continue to depend on a combination of factors. Some factors are largely within our controlsuch as: (i) maintenance of a positive reputation among our customers, (ii) development of new products which meet our customer's needs, (iii) obtainingregulatory approvals for our products in key markets, (iv) obtaining patents which protect our innovations, (v) development and protection of proprietaryknow-how in important technological areas, (vi) product quality, safety and cost effectiveness and (vii) continual and rigorous documentation of clinicalperformance. Other factors are outside of our control. We could see changes in regulatory standards or clinical practice which favor a competitor's technologyor reduce revenues in key areas of our business.In addition, we face competition from several large, global companies with product offerings similar to ours, such as Terumo BCT, LivaNova Plc andFresenius SE & Co. KGaA. Terumo and Fresenius, in particular, have significantly greater financial and other resources than we do and are strong competitorsin a number of our businesses. The following provides an overview of the key competitors in each of our four global product enterprises.•PlasmaIn the automated plasma collection market, we principally compete with the Fresenius' Fenwal product line, on the basis of quality, reliability, easeof use, services and technical features of the collection systems, and on the long-term cost-effectiveness of equipment and disposables. In China, themarket is populated by local producers of a product that is intended to be similar to ours. Recently, those competitors have expanded to marketsbeyond China, including6Table of ContentsEuropean and South American countries. In the field of plasma related software, MAK Systems is the primary commercial competitor along withapplications developed internally by our customers.•HospitalHemostasis ManagementThe TEG® Thrombelastograph Hemostasis Analyzer is used primarily in surgical applications. Our principal competitor in Europe and the UnitedStates is ROTEM analyzers. ROTEM was recently acquired by a subsidiary of Werfen, Instrumentation Laboratories, which is a United States basedlaboratory instrument manufacturer. Instrumentation Laboratories has also recently acquired Accriva Diagnostics, the owner of Hemochron andVerifynow hemostasis management products. Other competitive technologies include standard coagulation tests and platelet function testing. Thereare also additional technologies being explored to assess viscoelastic and other characteristics that can provide insights into the coagulation statusof a patient. The TEG® analyzer competes with other laboratory tests based on its ability to provide a more complete picture of a patient's hemostasisat a single point in time and the ability to measure the clinically relevant platelet function for an individual patient.Cell ProcessingIn the intraoperative surgical blood salvage market, competition is based on reliability, ease of use, service, support, and price. For high-volumeplatforms, each manufacturer's technology is similar, and our Cell Saver technology competes principally with products offered by LivaNova Plc,Medtronic, and Fresenius.In the perioperative surgical blood salvage market, our OrthoPAT system competes primarily against (i) non-automated processing systems whoseend product is an unwashed red blood cell unit for transfusion to the patient, (ii) transfusions of donated blood and (iii) coagulation therapies,principally tranexamic acid.The competition for processing cells for frozen storage is based on the level of automation, labor-intensiveness and system type (open versusclosed). Open systems may be weaker in good manufacturing process compliance. Moreover, blood processed after freezing through open systemshas a 24-hour shelf life.BloodTrack's primary competition are manual cross-matching and delivery systems. However, both Mediware in the United States and MSoft, basedin England, have competitive software offerings.•Blood CenterWe have several competitors in the Blood Center product lines, some of which compete across all blood components and others that are morespecialized.Terumo and Fresenius are our major competitors in platelet collection. In platelet collections, there are two areas of competition - automatedcollection and pooled random donor. In the automated collection area, competition is based on continual performance improvement, as measured bythe time and efficiency of platelet collection and the quality of the platelets collected. Each of these companies has taken a different technologicalapproach from ours in designing their systems for automated platelet collection. A key point of competition is speed, particularly in collecting twounits of platelets from a single donor. While not all donors are eligible to donate two units, we have seen our competitors gain an advantage inmarkets with a significant number of eligible donors. Terumo, in particular, has an advantage in the collection of two units of platelets from a singledonor. In addition to automated platelet collection offerings, we now also compete in the pooled random donor platelet segment from whole bloodcollections from which pooled platelets are derived with the Acrodose product or buffy coat pooling sets.Terumo and Fresenius are also competitors in the automated red cell collection market. However, it is important to note that most double red cellcollection is done in the U.S. and less than 10% of the red cells collected in the U.S. annually are collected via automation. Therefore, we alsocompete with the traditional method of collecting red cells from the manual collection of whole blood. We compete on the basis of total cost, type-specific collection, process control, product quality, and inventory management.We face intense competition in our whole blood business on the basis of quality and price. In North America, Europe and Asia-Pacific our maincompetitors are Fresenius, MacoPharma and Terumo. We do not have significant whole blood revenues in Japan today. With the ACP® (AutomatedCell Processor) brand, Haemonetics offers a closed system cell processor which gives blood processed through it a 14-day shelf life after beingremoved from frozen storage. We compete with Terumo's open systems in this market.In Blood Center software, MAK Technologies is a competitor along with systems developed internally by our customers.7Table of ContentsOur technical staff is highly skilled, but certain competitors have substantially greater financial resources and larger technical staffing at their disposal. Therecan be no assurance that competitors will not direct substantial efforts and resources toward the development and marketing of products competitive withthose of Haemonetics.Significant CustomersIn fiscal 2017, 2016 and 2015, our ten largest customers accounted for approximately 42%, 36% and 48% of our net revenues, respectively. In fiscal 2017and 2016, one plasma collection customer accounted for approximately 14% and 11% of our net revenues, respectively. There were no significant customersthat accounted for greater than 10% of our net revenues in fiscal 2015.Government RegulationMedical Device RegulationThe products we manufacture and market are subject to regulation by the Center of Biologics Evaluation and Research (“CBER”), Center for Devices andRadiological Health (“CDRH”) and the Center for Drug Evaluation and Research ("CDER") of the FDA, and other non-United States regulatory bodies.All medical devices introduced to the United States market since 1976 are required by the FDA, as a condition of marketing, to secure either a 510(k) pre-market notification clearance or an approved premarket approval application (“PMA”). In the United States, software used to automate blood centeroperations and blood collections and to track those components through the system are considered by the FDA to be medical devices, subject to 510(k) pre-market notification. Intravenous solutions (blood anticoagulants, solutions for storage of red blood cells, and saline) marketed by us for use with our manualcollection and automated systems requires us to obtain an approved New Drug Application (“NDA”) or Abbreviated New Drug Application (“ANDA”) fromCBER or CDER. A 510(k) pre-market clearance indicates the FDA’s agreement with an applicant’s determination that the product for which clearance issought is substantially equivalent to another legally marketed medical device. The process of obtaining a 510(k) clearance may involve the submission ofclinical data and supporting information. The process of obtaining an NDA approval for solutions is likely to take much longer than 510(k) clearancesbecause the FDA review process is more complicated.The FDA’s Quality System regulations set forth standards for our product design and manufacturing processes, requires the maintenance of certain recordsand provides for inspections of our facilities. There are also certain requirements of state, local and foreign governments that must be complied with in themanufacturing and marketing of our products. We maintain customer complaint files, record all lot numbers of disposable products, and conduct periodicaudits to assure compliance with applicable regulations. We place special emphasis on customer training and advise all customers that device operationshould be undertaken only by qualified personnel.The FDA can ban certain medical devices, detain or seize adulterated or misbranded medical devices, order repair, replacement or refund of these devices, andrequire notification of health professionals and others with regard to medical devices that present unreasonable risks of substantial harm to the public health.The FDA may also enjoin and restrain certain violations of the Food, Drug and Cosmetic Act and the Safe Medical Devices Act pertaining to medical devices,or initiate action for criminal prosecution of such violations.We are also subject to regulation in the countries outside the United States in which we market our products. The member states of the European Union (EU)have adopted the European Medical Device Directive, which creates a single set of medical device regulations for all EU member countries. Theseregulations require companies that wish to manufacture and distribute medical devices in EU member countries to obtain CE Marking for their products.Outside of the EU, many of the regulations applicable to our products are similar to those of the FDA. However, the national health or social securityorganizations of certain countries require our products to be registered by those countries before they can be marketed in those countries.We have complied with these regulations and have obtained such registrations where we market our products. Federal, state and foreign regulations regardingthe manufacture and sale of products such as ours are subject to change. We cannot predict what impact, if any, such changes might have on our business.8Table of ContentsConflict MineralsThe Dodd-Frank Wall Street Reform and Consumer Protection Act imposes disclosure requirements regarding the use of "Conflict Minerals" mined from theDemocratic Republic of Congo and adjoining countries in products, whether or not these products are manufactured by third parties. The conflict mineralsinclude tin, tantalum, tungsten and gold, and their derivatives. These requirements could affect the pricing, sourcing and availability of minerals used in themanufacture of our products. There will be additional costs associated with complying with the disclosure requirements, such as costs related to determiningthe source of any conflict minerals used in our products. Our supply chain is complex and we may be unable to verify the origins for all metals used in ourproducts.Other RegulationWe are also subject to various environmental, health and general safety laws, directives and regulations both in the U.S. and outside the U.S. Our operations,like those of other medical device companies, involve the use of substances regulated under environmental laws, primarily in manufacturing and sterilizationprocesses. We believe that sound environmental, health and safety performance contributes to our competitive strength while benefiting our customers,shareholders and employees.Environmental MattersFailure to comply with international, federal and local environmental protection laws or regulations could have an adverse impact on our business or couldrequire material capital expenditures. We continue to monitor changes in U.S. and international environmental regulations that may present a significant riskto the business, including laws or regulations relating to the manufacture or sale of products using plastics.EmployeesAs of April 1, 2017, we employed the full-time equivalent of 3,107 persons.Availability of Reports and Other InformationAll of our corporate governance materials, including the Principles of Corporate Governance, Code of Conduct and the charters of the Audit, Compensation,and Governance and Compliance Committees are published on the Investor Relations section of our website at http://phx.corporate-ir.net/phoenix.zhtml?c=72118&p=irol-IRHome. On this web site the public can also access, free of charge, our annual, quarterly and current reports and other documents filed orfurnished to the Securities and Exchange Commission, or SEC, as soon as reasonably practicable after we electronically file such material with, or furnish itto, the SEC.Cautionary Statement Regarding Forward-Looking InformationStatements contained in this report, as well as oral statements we make which are prefaced with the words “may,” “will,” “expect,” “anticipate,” “continue,”“estimate,” “project,” “intend,” “designed,” and similar expressions, are intended to identify forward looking statements regarding events, conditions, andfinancial trends that may affect our future plans of operations, business strategy, results of operations, and financial position. These statements are based onour current expectations and estimates as to prospective events and circumstances about which we can give no firm assurance. Further, any forward-lookingstatement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflectevents or circumstances after the date on which such statement is made. As it is not possible to predict every new factor that may emerge, forward-lookingstatements should not be relied upon as a prediction of our actual future financial condition or results.These forward-looking statements, like any forward-looking statements, involve risks and uncertainties that could cause actual results to differ materiallyfrom those projected or anticipated, including demand for whole blood and blood components, changes in executive management, changes in operations,restructuring and turnaround plans, asset revaluations to reflect current business conditions, asset sales, technological advances in the medical field andstandards for transfusion medicine and our ability to successfully offer products that incorporate such advances and standards, product quality, marketacceptance, regulatory uncertainties, including in the receipt or timing of regulatory approvals, the effect of economic and political conditions, the impact ofcompetitive products and pricing, blood product reimbursement policies and practices, foreign currency exchange rates, changes in customers’ orderingpatterns including single-source tenders, the effect of industry consolidation as seen in the plasma and blood center markets, the effect of communicablediseases and the effect of uncertainties in markets outside the U.S. (including Europe and Asia) in which we operate and other risks detailed under Item 1A.Risk Factors of this Annual Report on Form 10-K. The foregoing list should not be construed as exhaustive.9Table of ContentsITEM 1A. RISK FACTORSIn addition to the other information contained in this Annual Report on Form 10-K and the exhibits hereto, the following risk factors should be consideredcarefully in evaluating our business. Our business, financial condition, cash flows or results of operations could be materially adversely affected by any ofthese risks. This section contains forward-looking statements. You should refer to the explanation of the qualifications and limitations on forward-lookingstatements at the end of Item 1 of this Annual Report on Form 10-K.We recently completed a global strategic review of our business. If our new strategic direction does not yield the expected results or we fail to implementthe necessary changes to our operations, we could see material adverse effects on our business, financial condition or results of operations.In fiscal 2017, we organized our products into four categories for purposes of evaluating and developing their growth potential: Plasma, HemostasisManagement, Blood Center and Cell Processing. We believe that Plasma and Hemostasis Management have the greatest growth potential, while CellProcessing innovation offers an opportunity to increase market share and expand into new segments. We believe Blood Center competes in challengingmarkets which require us to manage the business differently, including reducing costs, shrinking the scope of the current product line, and evaluatingopportunities to exit unfavorable customer contracts.If we have not correctly identified the product categories with greatest growth potential, we will not allocate our resources appropriately which could have amaterial adverse effect on our business, financial condition or results of operations. Further, if we are unable to reduce costs and complexity in our BloodCenter business unit, we will obtain lower than expected cash flows to fund our future growth and capital needs. This could have a material adverse effect onour liquidity and results of operations.If we are unable to successfully expand our product lines through internal research and development and acquisitions, our business may be materially andadversely affected. The risks of missteps and set backs are an inherent part of the innovation and development processes in the medical device industry.Continued growth of our business depends on our maintaining a pipeline of profitable new products and successful improvements to our existing products.This requires accurate market analysis and carefully targeted application of intellectual and financial resources toward the development or acquisition of newproducts. The creation and adoption of technological advances is only one step. We must also efficiently develop the technology into a product whichconfers a competitive advantage, represents a cost effective solution or provides improved patient care. Finally, as a part of the regulatory process ofobtaining marketing clearance for new products, we conduct and participate in numerous clinical trials, the results of which may be unfavorable, or perceivedas unfavorable by the market, and could have a material adverse effect on our business, financial condition or results of operations.Loss of a significant customer could adversely affect our business.In fiscal 2017, one plasma collection customer accounted for approximately 14% of our net revenues and our ten largest customers accounted forapproximately 42% of our net revenues. If any of our largest customers materially reduce their purchases from us or terminate their relationship with us forany reason, we could experience an adverse effect on our results of operations or financial condition.Our four largest Plasma customers have contracts in place which will expire before the end of fiscal 2019. As a result, we will need to amend current contractsor enter into new contracts for the PCS® 300. A failure to enter into new contracts with these customers on acceptable terms, could have a material adverseeffect on our business, financial condition and results of operations.Our inability to obtain, or any delay in obtaining, any necessary U.S. or foreign regulatory clearances or approvals for our newly developed products orproduct enhancements could harm our business and prospects.Our products are subject to a high level of regulatory oversight. Our inability to obtain, or any delay in obtaining, any necessary U.S. or foreign regulatoryclearances or approvals for newly developed products or product enhancements could harm our business and prospects. The process of obtaining clearancesand approvals can be costly and time consuming. In addition, there is a risk that any approvals or clearances, once obtained, may be withdrawn or modified.Most medical devices cannot be marketed in the U.S. without 510(k) clearance or premarket approval by the FDA. We have recently submitted a newplasmapheresis device, the PCS® 300, for 510(k) regulatory clearance with the FDA and continue to work on future enhancements to this important product,some of which may require additional regulatory clearances.10Table of ContentsDelays in receipt of, or failure to obtain, necessary clearances or approvals for our new products could delay or preclude realization of product revenues fromnew products or result in substantial additional costs which could decrease our profitability.If we are unable to successfully grow our business through business relationships and acquisitions, our business may be materially and adversely affected. Promising partnerships and acquisitions may not be completed for reasons such as competition among prospective partners or buyers, our inability to reachsatisfactory terms, or the need for regulatory approvals. Any acquisition that we complete may be dilutive to earnings and require the investment ofsignificant resources. The economic environment may constrain our ability to access the capital needed for acquisitions and other capital investments.A significant portion of our revenue derives from the sale of blood collection supplies. Declines in the number of blood collection procedures haveadversely impacted our business and future declines may have an adverse effect on our business, financial condition and results of operations.The demand for whole blood disposable products in the U.S. continued to decrease in fiscal 2017 and 2016 due to a sustained decline in transfusion rates andactions taken by hospitals to improve blood management techniques and protocols. In response to this trend, U.S. blood center collection groups prefersingle source vendors for their whole blood collection products and are primarily focused on obtaining the lowest average selling prices. While we began tosee a moderation in the rate of market decline during fiscal 2017, we expect to see continued declines in transfusion rates and the market to remain price-focused and highly competitive for the foreseeable future. Continued declines in this market could have a material adverse effect on our liquidity and resultsof operations.Consolidation of the healthcare providers and blood collectors has increased demand for price concessions and caused the exclusion of suppliers fromsignificant market segments, which could have an adverse effect on our business, financial condition and results of operations.Political, economic and policy influences are causing the healthcare and blood collection industries to make substantial structural and financial changes thataffect our results of operations. Government and private sector initiatives limiting the growth of healthcare costs and causing structural reforms in healthcaredelivery, including the reduction in blood use and reduced payments for care. These trends have placed greater pricing pressure on suppliers, decreasedaverage selling prices and increased the number of sole source relationships. This pressure impacts our Hemostasis Management, Cell Processing and BloodCenter businesses.The expansion of group purchasing organizations in the United States, integrated delivery networks and large single accounts puts direct price pressure onour Hospital business. It also puts price pressure on our U.S. Blood Center customers who are also facing reduced demand for red cells. Our Blood Centercustomers have responded to this pressure by creating their own group purchasing organizations and resorting to single source tenders to create incentives forsuppliers, including us, to significantly reduce prices.We expect that market demand, government regulation, third-party reimbursement policies, government contracting requirements and societal pressures willcontinue to change the worldwide healthcare industry, resulting in further business consolidations and alliances among our customers and competitors. Thismay exert further downward pressure on the prices of our products and adversely impact our business, financial condition or results of operations.Quality problems with our processes, goods, and services could harm our reputation for producing high-quality products and erode our competitiveadvantage, sales, and market share.Quality is extremely important to us and our customers due to the serious and costly consequences of product failure. Our quality certifications are critical tothe marketing success of our products and services. If we fail to meet these standards or fail to adapt to evolving standards, our reputation could be damaged,we could lose customers, and our revenue and results of operations could decline.In June 2016, we issued a voluntary recall of certain whole blood collection kits sold to our Blood Center customers in the United States. The recall resultedfrom some collection sets' filters failing to adequately remove leukocytes from collected blood. Because most U.S. hospitals prefer to transfuse leukoreducedblood, our Blood Center customers may have conducted further tests to confirm the blood was adequately leukoreduced, sold the blood as non-leukoreducedat a lower price or discarded the blood collected using the defective sets. As a result of the recall, we recorded total charges of $7.1 million during fiscal 2017and have an insurance receivable of $2.9 million as of April 1, 2017. While we believe we have adequate insurance coverage, we may have additional lossesin future periods which may or may not be covered by insurance. These losses could have a material impact on our results of operations.11Table of ContentsAn interruption in our ability to manufacture our products, obtain key components or raw materials, or the failure of a sole source supplier may adverselyaffect our business.Certain key products are manufactured at single locations with limited alternate facilities. If an event occurs that results in damage to one or more of thesefacilities, we may be unable to supply the relevant products at previous levels or at all.In addition, for reasons of quality assurance or cost effectiveness, we purchase certain finished goods, components and raw materials from sole suppliers,notably JMS Co. Ltd., Kawasumi Laboratories and Sanmina Corporation, which is the sole manufacturer of all our apheresis equipment.Due to the stringent regulations and requirements of the FDA and other similar non-U.S. regulatory agencies regarding the manufacture of our products, wemay not be able to quickly establish additional or replacement sources for certain components or materials. A reduction or interruption in manufacturing, oran inability to secure alternative sources of raw materials or components, could have a material adverse effect on our business, results of operations, financialcondition and cash flows.Ongoing delays in expanding our liquid solutions production capacity could reduce our revenue, increase our costs, or prevent us from meeting contractedobligations, which could result in financial penalties and have an adverse effect on our results of operations.We primarily produce two solutions for use in our apheresis procedures: anti-coagulant and saline. Anti-coagulant is required for each apheresis procedure,including the collection of platelets and plasma. Saline is used by our Plasma customers to provide fluid replacement after a donation.We have been working to expand the capacity of our Union, South Carolina facility to produce both anti-coagulant and saline. We have experienced delaysin the completion of the project that have required us and a customer to rely on alternative sources of supply. If we are unable to successfully complete thecapacity expansion or obtain additional supplies at an appropriate price, our results of operations could continue to be adversely affected.Plastics are the principal component of our disposables, which are the main source of our revenues. Any change in the price, composition or availability ofthe plastics we purchase could adversely affect our business.We face risks related to price, composition and availability of the plastic raw materials used in our business.Increases in the price of petroleum derivatives could result in corresponding increases in our costs to procure plastic raw materials. Increases in the costs ofother commodities also may affect our procurement costs to a lesser degree.The composition of the plastic we purchase is also important. Today, we purchase plastics which contain phthalates, which are used to make plasticmalleable. Should plastics with phthalates become unavailable due to regulatory changes, we may be required to obtain regulatory approvals from FDA andforeign authorities for a number of products.While we have not experienced shortages in the past, any interruption in the supply for certain plastics could have a material impact on our business bylimiting our ability to manufacture and sell the products which represent a significant portion of our revenues.As approximately half of our revenue comes from outside the United States, we are subject to negative impacts on our results of operations from currencyfluctuation, geopolitical events, economic volatility, violations of anti-corruption laws, export and import restrictions, decisions by local regulatoryauthorities and the laws and medical practices in foreign jurisdictions. We do business in over 100 countries and have distributors in approximately 90 countries. This exposes us to currency fluctuation, geopolitical risk,economic volatility, anti-corruption laws, export and import restrictions, local regulatory authorities and the laws and medical practices in foreignjurisdictions.If there are sanctions or restrictions on the flow of capital which prevent product importation or receipt of payments in Russia or China, our business could beadversely affected.Our international operations are governed by the U.S. Foreign Corrupt Practices Act (FCPA) and other similar anti-corruption laws in other countries.Generally, these laws prohibit companies and their business partners or other intermediaries from making improper payments to foreign governments andgovernment officials in order to obtain or retain business. Global enforcement of such anti-corruption laws has increased in recent years, including aggressiveinvestigations and enforcement proceedings. While we have an active compliance program and various other safeguards to discourage impermissiblepractices, we have distributors in approximately 90 countries, several of which are considered high risk for corruption. As a result, our global operations carrysome risk of unauthorized impermissible activity on the part of one of our distributors, employees, agents or consultants. Any alleged or actual violationcould subject us to government scrutiny, severe criminal or civil fines, or sanctions on our ability to export product outside the U.S., which could adverselyaffect our reputation and financial condition.12Table of ContentsExport of U.S. technology or goods manufactured in the United States to some jurisdictions requires special U.S. export authorization or local market controlsthat may be influenced by factors, including political dynamics, outside our control.Finally, any other significant changes in the competitive, legal, regulatory, reimbursement or economic environments of the jurisdictions in which weconduct our international business could have a material impact on our business.Our success depends on our ability to attract and retain key personnel needed to successfully operate the business.We constantly monitor the dynamics of the economy, the healthcare industry and the markets in which we compete; and we continue to assess our keypersonnel that we believe are essential to our long-term success. Over the last year, we have hired a new Chief Executive Officer, Chief Financial Officer andnew personnel in a number of key executive positions. We have also effected significant organizational and strategic changes in connection with theaddition of these new executives. If we fail to effectively manage our ongoing organizational and strategic changes, our financial condition, results ofoperations, and reputation, as well as our ability to successfully attract, motivate and retain key employees, could be harmed.Our success also depends upon our ability to attract and retain other qualified managerial and technical personnel. Competition for such personnel is intense.We may not be able to attract and retain personnel necessary for the development of our business.If we are unable to meet our debt obligations or experience a disruption in our cash flows, it could have an adverse effect on our financial condition,results of operations or cost of borrowing.We have $315.4 million of debt outstanding at April 1, 2017 due before July 1, 2019. The obligations to pay interest and repay the borrowed amounts mayrestrict our ability to adjust to adverse economic conditions and our ability to fund working capital, capital expenditures, acquisitions or other generalcorporate requirements. The interest rate on the loan is variable and subject to change based on market forces. Fluctuations in interest rates could adverselyaffect our profitability and cash flows.In addition, as a global corporation, we have significant cash reserves held in foreign countries. These balances may not be immediately available to repayour debt.Our credit facilities contain financial covenants that require us to maintain specified financial ratios and make interest and principal payments. If we areunable to satisfy these covenants, we may be required to obtain waivers from our lenders. No assurance can be made that our lenders would grant such waiverson favorable terms, or at all, and we could be required to repay any borrowed amounts on short notice.Our operations and plans for future growth may require additional capital that may not be available to us, or only available to us on unfavorable terms.Our future capital requirements will depend on many factors, including operating requirements, product placements, current and future acquisitions and theneed to refinance existing debt. Our ability to issue additional debt or enter into other financing arrangements on acceptable terms could be adverselyaffected by our debt levels, unfavorable changes in economic conditions generally or uncertainties that affect the capital markets. Higher borrowing costs orthe inability to access capital markets could adversely affect our ability to support future growth and operating requirements and, as a result, our business,financial condition and results of operations could be adversely affected. As of April 1, 2017, we had $315.4 million of debt obligations due before July 1,2019. Refer to Liquidity and Capital Resources within our Management's Discussion and Analysis of Financial Condition and Results of Operationscontained in Item 7 of this Annual Report on Form 10-K for further discussion of our debt obligations.We recorded goodwill and other asset impairment charges that reduced our income during the current fiscal year and may record additional charges infuture periods.We evaluate goodwill for impairment at least annually, or on an interim basis between annual tests when events or circumstances indicate that it is morelikely than not that the fair value of a reporting unit is less than its carrying value. During the fourth quarter of fiscal 2017, we performed our annual goodwillimpairment test and concluded that we had an impairment of $57.0 million in our North America Blood Center reporting unit, which represented the entiregoodwill balance associated with this reporting unit. There were no other reporting units at risk of impairment as of the fiscal 2017 annual test date. Theimpairment charge recorded does not impact our liquidity, cash flows from operations, future operations, or compliance with debt covenants.During fiscal 2017, we performed a review of certain non-core and underperforming assets that were at risk of being impaired due to the recent changes in ourstrategic direction. This review resulted in the decision to discontinue the use of and investment in certain long-lived assets, including property, plant andequipment and intangible assets. Accordingly, during fiscal 2017, we recorded asset impairment charges of $18.1 million associated with this review. Theimpairment charges recorded do not impact our liquidity, cash flows from operations, future operations, or compliance with debt covenants.13Table of ContentsFuture goodwill impairment charges or other asset impairment charges, if any, could materially adversely impact our results of operations in the period inwhich they are recorded. We will continue to monitor our intangible assets for potential impairments in future periods. Refer to Critical Accounting Policieswithin our Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Item 7 of this Annual Report on Form 10-Kfor a discussion of key assumptions used in our testing.As a medical device manufacturer we are subject to a number of laws and regulations. Non-compliance with those laws or regulations could adverselyaffect our financial condition and results of operations. The manufacture, distribution and marketing of our products are subject to regulation by the FDA and other non-United States regulatory bodies. We mustobtain specific regulatory clearance prior to selling any new product or service, a process which is costly and time consuming. If we are unable to obtain thenecessary regulatory clearance we will be unable to introduce new enhanced product. Our operations are also subject to continuous review and monitoring bythe FDA and other regulatory authorities. Failure to substantially comply with applicable regulations could subject our products to recall or seizure bygovernment authorities, or an order to suspend manufacturing activities. If our products were determined to have design or manufacturing flaws, this couldresult in their recall or seizure. Either of these situations could also result in the imposition of fines.The European Union regulatory bodies are expected to finalize a new Medical Device Regulation (MDR) in calendar year 2017, replacing the existingdirectives and providing three years for transition and compliance. The MDR is expected to change several aspects of the existing regulatory framework, suchas clinical data requirements, and introduce new ones, such as Unique Device Identification. We, and the notified bodies who will oversee compliance to thenew MDR, face uncertainties as the MDR is rolled out and enforced, creating risks in several areas including the CE Marking process and data transparencyin the upcoming years.We operate in an industry susceptible to significant product liability claims. Product liability claims could damage our reputation and impair our abilityto market our products or obtain professional or product liability insurance, or increase the cost of such insurance.Our products are relied upon by medical personnel in connection with the treatment of patients and the collection of blood or blood components fromdonors. In the event that patients or donors sustain injury or death in connection with their condition or treatment, we, along with others, may be sued, andwhether or not we are ultimately determined to be liable, we may incur significant legal expenses. These claims may be brought by individuals seeking reliefon their own behalf or purporting to represent a class. In addition, product liability claims may be asserted against us in the future based on events we are notaware of at the present time.In addition, such litigation could damage our reputation and, therefore, impair our ability to market our products or obtain professional or product liabilityinsurance, or increase the cost of such insurance. While we believe that our current product liability insurance coverage is sufficient, there is no assurance thatsuch coverage will be adequate to cover incurred liabilities or that we will be able to obtain acceptable product and professional liability coverage in thefuture.Many of our competitors have significantly greater financial means and resources, which may allow them to more rapidly develop new technologies andmore quickly address changes in customer requirements. Our ability to remain competitive depends on a combination of factors. Certain factors are within our control such as reputation, regulatory approvals,patents, unpatented proprietary know-how in several technological areas, product quality, safety, cost effectiveness and continued rigorous documentation ofclinical performance. Other factors are outside of our control such as regulatory standards, medical standards, reimbursement policies and practices, and thepractice of medicine.As a global corporation, we are exposed to fluctuations in currency exchange rates, which could adversely affect our cash flows and results of operations. International revenues and expenses account for a substantial portion of our operations. In fiscal 2017, our international revenues accounted for 41.0% of ourtotal revenues. The exposure to fluctuations in currency exchange rates takes different forms. Reported revenues, as well as manufacturing and operationalcosts denominated in foreign currencies by our international businesses, fluctuate due to exchange rate movement when translated into U.S. dollars forfinancial reporting purposes. Fluctuations in exchange rates could adversely affect our profitability in U.S. dollars of products and services sold by us intointernational markets, where payment for our products and services and related manufacturing and operational costs is made in local currencies.We are entrusted with sensitive personal information in the course of operating our business and serving our customers. If we suffer a breach of security,our reputation could be harmed and we could incur costs or liabilities. Government agencies require that we implement measures to ensure the integrity and security of such personal data and, in the event of a breach of protocol,that we inform affected individuals. If our systems are not properly designed or implemented, or14Table of Contentssuffer a breach of security or an intrusion (e.g., “hacking”) by unauthorized persons, our reputation could be harmed, and we could incur costs and liabilitiesto affected persons and enforcement agencies.We rely on the proper function, availability and security of information technology systems to operate our business and to serve our customers and a cyber-attack or other breach of these systems could have a material adverse effect on our business, financial condition or results of operations.We rely on information technology systems to process, transmit, and store electronic information in our day-to-day operations. Similar to other large multi-national companies, the size and complexity of our information technology systems makes them vulnerable to a cyber-attack, malicious intrusion,breakdown, destruction, loss of data privacy, or other significant disruption. Our information systems require an ongoing commitment of significant resourcesto maintain, protect, and enhance existing systems and develop new systems to keep pace with continuing changes in information processing technology,evolving systems and regulatory standards, the increasing need to protect patient and customer information, and changing customer patterns. In addition,third parties may attempt to hack into our products to obtain data relating to patients with our products or our proprietary information. Any failure by us tomaintain or protect our information technology systems and data integrity, including from cyber-attacks, intrusions or other breaches, could result in theunauthorized access to patient data and personally identifiable information, theft of intellectual property or other misappropriation of assets, or otherwisecompromise our confidential or proprietary information and disrupt our operations. Any of these events, in turn, may cause us to lose existing customers,have difficulty preventing, detecting, and controlling fraud, have disputes with customers, physicians, and other health care professionals, be subject to legalclaims and liability, have regulatory sanctions or penalties imposed, have increases in operating expenses, incur expenses or lose revenues as a result of adata privacy breach or theft of intellectual property, or suffer other adverse consequences, any of which could have a material adverse effect on our business,financial condition or results of operations.We are subject to the risks associated with communicable diseases. A significant outbreak of a disease could reduce the demand for our products andaffect our ability to provide our customers with products and services. An eligible donor’s willingness to donate is affected by concerns about their personal health and safety. Concerns about communicable diseases (such aspandemic flu, SARS, or HIV) could reduce the number of donors, and accordingly reduce the demand for our products for a period of time. A significantoutbreak of a disease could also affect our employees’ ability to work, which could limit our ability to produce product and service our customers.There is a risk that our intellectual property may be subject to misappropriation in some countries. Certain countries, particularly China, do not enforce compliance with laws that protect intellectual property rights with the same degree of vigor as isavailable under the United States and European systems of justice. Further, certain of our intellectual property rights are not registered in China, or if theywere, have since expired. This may permit others to produce copies of products in China that are not covered by currently valid patent registrations. There isalso a risk that such products may be exported from China to other countries.In order to aggressively protect our intellectual property throughout the world, we have a program of patent disclosures and filings in markets where weconduct significant business. While we believe this program is reasonable and adequate, the risk of loss is inherent in litigation as different legal systemsoffer different levels of protection to IP, and it is still possible that even patented technologies may not be protected absolutely from infringement.Pending and future intellectual property litigation could be costly and disruptive to us.We operate in an industry that is susceptible to significant intellectual property litigation. This type of litigation is expensive, complex and lengthy and itsoutcome is difficult to predict. Patent litigation may result in adverse outcomes and could significantly divert the attention of our technical and managementpersonnel.Our products may be determined to infringe another party's patent, which could lead to financial losses or adversely affect our ability to market ourproducts. There is a risk that one or more of our products may be determined to infringe a patent held by another party. If this were to occur, we may be subject to aninjunction or to payment of royalties, or both, which may adversely affect our ability to market the affected product(s) or otherwise have an adverse effect onour results of operations. In addition, competitors may patent technological advances which may give them a competitive advantage or create barriers toentry.We sell our products in certain emerging economies which exposes us to less mature regulatory systems, more volatile markets for our products, andgreater credit risks. A loss of funding for our products or changes to the regulatory regime could lead to lost revenue or account receivables. 15Table of ContentsThere are risks with doing business in emerging economies, such as Brazil, Russia, India and China. These economies tend to have less mature productregulatory systems and more volatile financial markets. In addition, the government controlled health care system's ability to invest in our products andsystems may abruptly shift due to changing government priorities or funding capacity. Our ability to sell products in these economies is dependent upon ourability to hire qualified employees or agents to represent our products locally, and our ability to obtain and maintain the necessary regulatory approvals in aless mature regulatory environment. If we are unable to retain qualified representatives or maintain the necessary regulatory approvals, we will not be able tocontinue to sell products in these markets. We are exposed to a higher degree of financial risk if we extend credit to customers in these economies.In many of the international markets in which we do business, including certain parts of Europe, South America, the Middle East, Russia and Asia, ouremployees, agents or distributors offer to sell our products in response to public tenders issued by various governmental agencies. There is additional risk in selling our products through agents or distributors, particularly in public tenders. If they misrepresent our products, do not provideappropriate service and delivery, or commit a violation of local or U.S. law, our reputation could be harmed, and we could be subject to fines, sanctions orboth.We have a complex global supply chain which includes key sole source suppliers. Disruptions to this system could delay our ability to deliver finishedproducts. We have a complex global supply chain which involves integrating key suppliers and our manufacturing capacity into a global movement of componentsand finished goods.We have certain key suppliers, including JMS Co. Ltd., Kawasumi Laboratories and Sanmina Corporation, who have their own complex supply chainsthroughout Asia.Any disruption to one or more of our suppliers’ production or delivery of sufficient volumes of components conforming to our specifications could disrupt ordelay our ability to deliver finished products to our customers. For example, we purchase components in Asia for use in manufacturing in the United States,Puerto Rico and Mexico. We source all of our apheresis equipment from Asia and regularly ship finished goods from the United States, Puerto Rico andMexico to the rest of the world.Due to the high standards and FDA requirements applicable to manufacturing our products, such as the FDA's Quality System Regulation and GoodManufacturing Practices, we may not be able to quickly establish additional or replacement sources for certain raw materials, components or finished goods.We might be forced to purchase substantial inventory, if available, to last until we are able to qualify an alternate supplier. If we cannot obtain a necessary component, we may need to find, test and obtain regulatory approval or clearance for a replacement component, produce thecomponent ourselves or redesign the related product, which would cause significant delay and could increase our manufacturing costs.In the event that we are unable to obtain sufficient quantities of raw materials, components or finished goods on commercially reasonable terms or in a timelymanner, our ability to manufacture our products on a timely and cost-competitive basis may be compromised, which may have a material adverse effect onour business, financial condition and results of operations.Our effective tax rate may fluctuate and we may incur obligations in tax jurisdictions in excess of amounts that have been accrued.As a global company, we are subject to taxation in numerous countries, states and other jurisdictions. In preparing our financial statements, we record theamount of tax payable in each of the jurisdictions in which we operate. Our future effective tax rate, however, may be lower or higher than prior years due tonumerous factors, including a change in our geographic earnings mix, changes in the measurement of our deferred taxes, and recently enacted and future taxlaw changes in jurisdictions in which we operate. Changes in our operations, including headcount in Switzerland, Puerto Rico or Malaysia, could adverselyaffect our tax rate due to favorable tax rulings in these jurisdiction. We are also subject to tax audits in various jurisdictions, and tax authorities may disagreewith certain positions we have taken and assess additional taxes. Any of these factors could cause us to experience an effective tax rate significantly differentfrom previous periods or our current expectations, which could adversely affect our business, results of operations, and cash flows.Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial condition, results of operations and/orliquidity.We are subject to income taxes, non-income based taxes and tax audits, in both the U.S. and various foreign jurisdictions. Tax authorities may disagree withcertain positions we have taken and assess additional taxes. We regularly assess the likely outcomes of these audits in order to determine the appropriatenessof our tax provision and have established contingency reserves for material,16Table of Contentsknown tax exposures. However, the calculation of such tax exposures involves the application of complex tax laws and regulations in many jurisdictions, aswell as interpretations as to the legality under various rules in certain jurisdictions. Therefore, there can be no assurance that we will accurately predict theoutcomes of these disputes or other tax audits or that issues raised by tax authorities will be resolved at a financial cost that does not exceed our relatedreserves, and the actual outcomes of these disputes and other tax audits could have a material impact on our results of operations or financial condition.In addition, further changes in the tax laws of foreign jurisdictions could arise, including as a result of the base erosion and profit shifting (BEPS) projectundertaken by the Organisation for Economic Cooperation and Development (OECD). The OECD, which represents a coalition of member countries, hasissued recommendations that, in some cases, would make substantial changes to numerous long-standing tax positions and principles. These contemplatedchanges, to the extent adopted by OECD members and/or other countries, could increase tax uncertainty and may adversely affect our provision for incometaxes.Our products are made with materials which are subject to regulation by governmental agencies. An agency's prohibition of certain compounds coulddisrupt our manufacturing operations and delivery of finished products to our customers. Environmental regulations may prohibit the use of certain compounds in products we market and sell in regulated markets. If we are unable to substitutesuitable materials into our processes, our manufacturing operations may be disrupted. In addition, we may be obligated to disclose the origin of certainmaterials used in our products, including but not limited to, metals mined from locations which have been the site of human rights violations.We have disclosed material weaknesses in our internal controls over financial reporting relating to our accounting for inventory, which could adverselyaffect our ability to report our financial condition, results of operations or cash flows accurately and on a timely basis.In connection with our assessment of internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, we identified a materialweakness in our internal controls over financial reporting relating to our accounting for inventory. For a discussion of our internal controls over financialreporting and a description of the identified material weakness, see Controls and Procedures contained in Item 9A of this Annual Report on Form 10-K.A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibilitythat a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.During fiscal 2017, management's assessment identified control deficiencies in internal control over financial reporting related to the valuation of ourinventory and cost of goods sold. Specifically, we identified a deficiency in the internal controls executed to appropriately account for manufacturingvariances in inventory on our consolidated balance sheet and cost of goods sold on our consolidated statements of operations. Management determined thatits accounting process for amortizing manufacturing variances to cost of goods sold lacked adequate levels of monitoring and review controls toappropriately identify and correct errors in the calculation in a timely manner. While reported inventory and related accounts are accurate as of April 1, 2017,the material weakness resulted in errors in these accounts in prior periods. As a result of this deficiency, until it is substantially remediated, it is possible thatinternal controls over financial reporting may not prevent or detect errors in the accounting for inventory as reflected in our financial statements.While actions have been taken to improve our internal controls in response to the identified material weakness related to certain aspects of accounting forinventory, additional work continues to address and remediate the identified material weaknesses. Until these actions are fully implemented and tested, thematerial weakness in our internal controls over financial reporting relating to inventory will continue to exist. As a result, our ability to accurately report, ona timely basis, our future financial condition, results of operations or cash flows may be adversely affected.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEM 2. PROPERTIESOur owned headquarters facility is located in Braintree, Massachusetts and is approximately 224,000 square feet. As of April 1, 2017, we owned or leased atotal of 60 facilities. Our owned and leased facilities consist of approximately 1.7 million square feet. Included within these properties are 7 manufacturingfacilities. We believe all of these facilities are well-maintained and suitable for the operation conducted in them. We consider the following manufacturingfacilities to be material to the business.Leetsdale, Pennsylvania is an approximately 82,000 square foot leased facility which is used for warehousing, distribution and manufacturing operationsprimarily supporting our Plasma business unit. Annual lease expense is approximately $0.4 million for this facility.17Table of ContentsDraper, Utah is an approximately 100,000 square foot owned facility used for distribution and manufacturing operations supporting our Plasma business unit.During fiscal 2016, we purchased this facility for $6.6 million.We lease a 115,000 square foot facility in Fajardo, Puerto Rico under an agreement with Pall Corporation executed in connection with the Company'sacquisition of Pall's transfusion medicine business on August 1, 2012. This facility is used for production of blood filters.We lease 127,000 square feet of space in Tijuana, Mexico with an annual lease expense of approximately $0.8 million. We also own a facility in Tijuana,Mexico that is approximately 182,000 square feet. These facilities are used for the production of whole blood collection kits, plasma, blood center andhospital disposables, and intra-plant components.We own approximately 240,000 square feet of space in Penang, Malaysia used to manufacture disposable products for our European and Asian customers. Welease the land on which the facility was built and the lease payments have been prepaid. The lease term of 30 years expires in 2043 with an option to renewfor a period of no less than 10 years.Our facilities are used by the following business segments: Number of FacilitiesJapan10EMEA16North America Plasma3All Other31Total60ITEM 3. LEGAL PROCEEDINGSWe are presently engaged in various legal actions, and although our ultimate liability cannot be determined at the present time, we believe, based onconsultation with counsel, that any such liability will not materially affect our consolidated financial position or our results of operations.Italian Employment LitigationOur Italian manufacturing subsidiary is party to several actions initiated by former employees of our facility in Ascoli-Piceno, Italy. We ceased operations atthe facility in fiscal 2014 and sold the property in fiscal 2017. These include actions claiming (i) working conditions and minimum salaries should have beenestablished by either a different classification under their national collective bargaining agreement or a different agreement altogether, (ii) certain solidarityagreements, which are arrangements between the Company, employees and the government to continue full pay and benefits for employees who wouldotherwise be terminated in times of low demand, are void, and (iii) rights to payment of the extra time used for changing into and out of the working clothesat the beginning and end of each shift.In addition, a union represented in the Ascoli plant filed an action claiming that the Company discriminated against it in favor of three other representedunions by (i) interfering with an employee referendum, (ii) interfering with an employee petition to recall union representatives from office, and (iii)excluding the union from certain meetings.Finally, we have been added as defendants on claims filed against Pall Corporation prior to our acquisition of the plant in August 2012. These claims relateto agreements to "freeze" benefit allowances for a certain period in exchange for Pall's commitments on hiring and plant investment.As of April 1, 2017, the total amount of damages claimed by the plaintiffs in these matters is approximately $4.4 million. At this point in the proceedings, webelieve losses are unlikely and therefore no amounts have been accrued. In the future, we may receive adverse rulings from the courts which could change ourjudgment on these cases.SOLX ArbitrationIn July 2016, H2 Equity, LLC, formerly known as Hemerus Corporation, filed an arbitration claim for $17 million in milestone and royalty paymentsallegedly owed as part of our acquisition of the filter and storage solution business from Hemerus Medical, LLC ("Hemerus") in fiscal 2014. The acquiredstorage solution is referred to as SOLX.At the closing in April 2013, Haemonetics paid Hemerus a total of $24 million and agreed to a $3 million milestone payment due when the FDA approved anew indication for SOLX (the “24-Hour Approval”) using a filter acquired from Hemerus. We18Table of Contentsalso agreed to make future royalty payments up to a cumulative maximum of $14 million based on the sale of products incorporating SOLX over a ten yearperiod.Due to performance issues with the Hemerus filter, Haemonetics filed for, and received, the 24-Hour Approval using a Haemonetics filter. Accordingly,Haemonetics did not pay Hemerus the $3 million milestone payment because the 24-Hour Approval was obtained using a Haemonetics filter, not a Hemerusfilter. In addition, we have not paid any royalties to date as we have not made any sales of products incorporating SOLX. H2 Equity claims, in part, that we owe them $3 million for the receipt of the 24-Hour Approval despite the use of a Haemonetics filter to obtain the approvaland that we have failed to make commercially reasonable efforts to market and sell products incorporating SOLX. We believe that we have meritoriousdefenses to these claims.It is not possible to accurately evaluate the likelihood or amount of any potential losses related to this claim and therefore no amounts have been accrued.ITEM 4. MINE SAFETY DISCLOSURESNone.ITEM 4A. EXECUTIVE OFFICERSExecutive Officers of the RegistrantThe information concerning our executive officers is as follows. Executive officers are elected by and serve at the discretion of our Board of Directors. Thereare no family relationships between any director or executive officer and any other director or executive officer of Haemonetics Corporation.CHRISTOPHER SIMON (age 53) President and Chief Executive Officer joined Haemonetics in May 2016. Mr. Simon previously served as a Senior Partner ofMcKinsey & Company in Global Medical Products Practice. Mr. Simon was a consultant with McKinsey & Company from 1993 until he joined theCompany and recently was the Lead Partner for McKinsey & Company’s strategy review for Haemonetics. Prior to that, he served in commercial roles withBaxter Healthcare Corporation.WILLIAM BURKE (age 49) Chief Financial Officer joined Haemonetics in August 2016. Mr. Burke is responsible for the global finance organizationincluding accounting, financial planning and analysis, tax and investor relations. Previously, Mr. Burke was Chief Integration Officer and Vice President,Integration for Medtronic plc, following its acquisition of Covidien plc, a global healthcare products company. Prior to this role, Mr. Burke worked atCovidien for over nine years in various finance leadership roles including Chief Financial Officer for Europe, Vice President of Corporate Strategy andPortfolio Management and Vice President of Financial Planning and Analysis.MICHELLE BASIL (age 45) Executive Vice President, General Counsel joined Haemonetics in March 2017. Ms. Basil is responsible for Haemonetics’ legal,compliance and corporate audits and controls groups. Previously, Ms. Basil was Partner and Chair of the Life Sciences Practice Group at Nutter, McClennen& Fish, LLP. At Nutter, Ms. Basil focused her practice on corporate and securities law, including mergers and acquisitions, strategic partnerships andcorporate governance matters, and represented both public and private companies, including life sciences and medical technology. NEIL RYDING (age 56) Executive Vice President, Global Operations joined Haemonetics in September 2015. Prior to joining Haemonetics, Mr. Ryding hadover 30 years of experience in leading global manufacturing operations and supply chain organizations in regulated environments within the aerospace andmedical device industries. Mr. Ryding’s previous experience includes various roles with Rolls Royce Aero-Engines, Johnson & Johnson, Smith & Nephew,Cardinal Health and Hospira.19Table of ContentsPART IIITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESMarket InformationHaemonetics' common stock is listed on the New York Stock Exchange under the symbol HAE. The following table sets forth for the periods indicated thehigh and low sales prices of such common stock, which represent actual transactions as reported by the New York Stock Exchange.FirstQuarter SecondQuarter ThirdQuarter FourthQuarterFiscal year ended April 1, 2017: Market price of Common Stock: High$35.67 $38.06 $41.41 $41.65Low$25.98 $29.08 $32.76 $36.44Fiscal year ended April 2, 2016: Market price of Common Stock: High$45.32 $42.24 $34.63 $35.67Low$39.69 $34.13 $29.70 $29.20HoldersThere were 178 holders of record of the Company’s common stock as of April 1, 2017.DividendsThe Company has never paid cash dividends on shares of its common stock and does not expect to pay cash dividends in the foreseeable future.Unregistered Sales of Equity Securities and Use of ProceedsNone.20Table of ContentsITEM 6. SELECTED FINANCIAL DATAHaemonetics Corporation Five-Year Review(In thousands, except per share and employee data)2017 2016 2015 2014 2013Summary of Operations Net revenues$886,116 $908,832 $910,373 $938,509 $891,990Cost of goods sold507,622 502,918 475,955 470,144 463,859Gross profit378,494 405,914 434,418 468,365 428,131Operating expenses: Research and development37,556 44,965 54,187 54,200 44,394Selling, general and administrative301,726 317,223 337,168 365,977 323,053Impairment of assets58,593 92,395 5,441 1,711 4,247Contingent consideration (income) expense— (4,727) (2,918) 45 —Total operating expenses397,875 449,856 393,878 421,933 371,694Operating (loss) income(19,381) (43,942) 40,540 46,432 56,437Other expense, net(8,095) (9,474) (9,375) (10,031) (6,540)(Loss) income before (benefit) provision for incometaxes(27,476) (53,416) 31,165 36,401 49,897(Benefit) provision for income taxes(1,208) 2,163 14,268 1,253 11,097Net (loss) income$(26,268) $(55,579) $16,897 $35,148 $38,800(Loss) income per share: Basic$(0.51) $(1.09) $0.33 $0.68 $0.76Diluted$(0.51) $(1.09) $0.32 $0.67 $0.74Weighted average number of shares51,524 50,910 51,533 51,611 51,349Common stock equivalent shares— — 556 766 910Weighted average number of shares and common stockequivalent shares51,524 50,910 52,089 52,377 52,2592017 2016 2015 2014 2013Financial and Statistical Data: Working capital$298,850 $302,535 $368,985 $391,944 $403,153Current ratio2.4 2.6 3.0 2.8 3.2Property, plant and equipment, net$323,862 $337,634 $321,948 $271,437 $256,953Capital expenditures$76,135 $102,405 $122,220 $73,648 $62,188Depreciation and amortization$89,733 $89,911 $86,053 $81,740 $65,481Total assets$1,238,709 $1,319,128 $1,485,417 $1,514,178 $1,461,917Total debt$314,647 $408,000 $427,891 $437,687 $480,094Stockholders’ equity$739,610 $721,565 $826,122 $837,888 $769,182Debt as a % of stockholders’ equity42.5% 56.5% 51.8% 52.2% 62.4%Employees3,107 3,225 3,383 3,782 3,56321Table of ContentsITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSOur BusinessHaemonetics is a global healthcare company dedicated to providing a suite of innovative hematology products and solutions to customers, to help themimprove patient care and reduce the cost of healthcare. Our technology addresses important medical markets, including blood and plasma componentcollection, the surgical suite, and hospital transfusion services.Blood and its components (plasma, platelets, and red cells) have many vital and frequently life-saving clinical applications. Plasma is used for patients withmajor blood loss and is manufactured into biopharmaceuticals to treat a variety of illnesses, including immune diseases and coagulation disorders. Red cellstreat trauma patients or patients undergoing surgery with high blood loss, such as open heart surgery or organ transplant. Platelets have many uses in patientcare, including supporting cancer patients undergoing chemotherapy. Blood is essential to a modern healthcare system.Recent DevelopmentsRestructuring InitiativeDuring fiscal 2017, we launched a multi-year restructuring initiative designed to reposition our organization and improve our cost structure. This initiativeincludes a reduction of headcount and operating costs, simplification of certain product lines, and modification of manufacturing operations to align with ourstrategic direction.The fiscal 2017 phase was expected to incur approximately $26 million of restructuring and turnaround charges and was estimated to achieve cost savings of$40 million. During fiscal 2017, we incurred $28.7 million of restructuring and turnaround charges under this initiative and exceeded our estimated savingstarget of $40 million. As of April 1, 2017, this initial phase was substantially complete. Additionally, during fiscal 2017, we recorded $5.6 million ofrestructuring and turnaround charges under a prior program. We continue to assess non-core and underperforming assets and evaluate opportunities toimprove our cost structure as part of our turnaround and expect to incur additional charges and benefits during fiscal 2018 and beyond.PCS® 300In April, 2017, we submitted a new plasmapheresis device, the PCS® 300, for 510(k) regulatory clearance with the United States Food and DrugAdministration ("FDA") and continue to work on future enhancements to this important product, some of which may require additional clearances. Ourplanned roll out of this new platform includes the placement of a significant number of new devices. Such placements will require meaningful capitalexpenditures and new customer contracts that reflect pricing and volumes appropriate to these investments.ImpairmentsAs discussed in Note 5, Goodwill and Intangible Assets, to our consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K, weevaluate goodwill for impairment at least annually, or on an interim basis between annual tests when events or circumstances indicate that it is more likelythan not that the fair value of a reporting unit is less than its carrying value. Our reporting units for purposes of assessing goodwill impairment are organizedprimarily based on operating segments and geography and include: (a) North America Plasma, (b) North America Blood Center, (c) North America Hospital,(d) EMEA, (e) Asia-Pacific and (f) Japan. In the prior period, North America Blood Center and North America Hospital were components of a single reportingunit, Americas Blood Center and Hospital. During the fourth quarter of fiscal 2017, we completed certain organizational changes which resulted in thedisaggregation of Americas Blood Center and Hospital into two separate reporting units. As a result of our annual test, we recorded an impairment charge of$57.0 million in the North America Blood Center reporting unit during the fourth quarter of fiscal 2017, which represented the entire goodwill balanceassociated with this reporting unit.During fiscal 2017, we performed a review of certain non-core and underperforming assets that were at risk of being impaired due to the recent changes in thestrategic direction of the Company. This review resulted in the decision to discontinue the use of and investment in certain long-lived assets, includingproperty, plant and equipment and intangible assets. Accordingly, during fiscal 2017, we recorded $18.1 million of impairment charges, which included thewrite down of $13.3 million of property, plant and equipment and $4.8 million of intangible assets. Refer to Note 5, Goodwill and Intangible Assets, andNote 12, Property, Plant and Equipment, to our consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for furtherinformation.DivestitureOn April 27, 2017, we sold our SEBRA sealers product line to Machine Solutions Inc. because it was no longer aligned with our long-term strategicobjectives. In connection with this transaction, we received net proceeds of $9 million. These proceeds22Table of Contentsare subject to a post-closing adjustment based on final asset values as determined during the 90 day transition period. The preliminary pre-tax gain expectedto be recorded as a result of this transaction is $8 million. The SEBRA portfolio includes a suite of products which primarily include radio frequency sealersthat are used to seal tubing as part of the collection of whole blood and blood components, particularly plasma. The SEBRA product line generatedapproximately $6 million of revenue in our Plasma business unit in fiscal 2017.Product RecallIn June 2016, we issued a voluntary recall of certain whole blood collection kits sold to our Blood Center customers in the U.S. The recall resulted from somecollection sets' filters failing to adequately remove leukocytes from collected blood. As a result of the recall, our Blood Center customers may haveconducted further tests to confirm the blood was adequately leukoreduced, sold the blood labeled as non-leukoreduced at a lower price or discarded theblood collected using the defective sets. As a result of the recall, we have recorded total charges of $7.1 million during fiscal 2017, which consists of $3.7million of charges associated with customer returns and inventory reserves and $3.4 million of charges associated with customer claims, as discussed below.We may record incremental charges in future periods.The $3.7 million of charges associated with customer returns consisted of $2.5 million of sales returns, $1.1 million of net inventory reserves for the affectedsets on-hand that had not yet been shipped to customers and $0.1 million of freight expenses.The $3.4 million of charges associated with customer claims are based on claims seeking reimbursement for $14.2 million in losses sustained as a result of therecall. While the customers making these claims purchased substantially all the affected units, incremental charges may be recorded in future periods asadditional data supporting the claims becomes available. We have an enforceable insurance policy in place which we believe provides coverage for a portionof the claims received to date. As of April 1, 2017, we had an insurance receivable of $2.9 million. We will assess the potential for additional insurancerecoveries as we receive more information about customer claims in future reporting periods.Declines in U.S. Blood Center CollectionsThe demand for whole blood disposable products in the U.S. continued to decrease in fiscal 2017 and 2016 due to a sustained decline in transfusion rates andactions taken by hospitals to improve blood management techniques and protocols. In response to this trend, U.S. blood center collection groups selectedsingle source vendors for their whole blood collection products and became primarily focused on obtaining the lowest average selling prices. While webegan to see a moderation in the rate of market decline during fiscal 2017, we expect to see continued declines in transfusion rates and the market to remainprice-focused and highly competitive for the foreseeable future.Apheresis Red Cell Collection ArrangementsDuring fiscal 2016, the American Red Cross and two group purchasing organizations representing other U.S. blood collectors ("Blood Center GPOs")requested updated contracts for sole source supply on apheresis red cell collections. The resulting pricing in our American Red Cross contract and therecommendations by both Blood Center GPOs that their members use our competitor's technology continue to negatively affect red cell revenues and grossmargins. The American Red Cross contract resulted in our gaining 100% share of their apheresis red cell collection business and higher sales volumes, but atlower prices. The impact of the price concessions began in the third quarter of fiscal 2016, while the achievement of 100% share of the American Red Cross'business occurred in the fourth quarter of fiscal 2017. The negative impact on fiscal 2017 operating income as a result of the American Red Cross contractand market share losses among members of the Blood Center GPOs was an additional $8 million as compared to fiscal 2016. While we expect this negativeimpact to continue in the first half of fiscal 2018, we anticipate stabilization in the second half of fiscal 2018 after annualization of the final priceconcessions. Red cell disposable revenues in the U.S. totaled $26.0 million and $34.8 million during fiscal 2017 and fiscal 2016, respectively.Declines in Platelet CollectionsWhile we market our platelet products globally, the dynamics of each market are significantly different. Despite modest increases in the demand for plateletsin Europe and Japan, improved collection efficiencies that increase the yield of platelets per collection and more efficient use of collected platelets haveresulted in flat markets for platelet usage and related disposables in these regions.Within these flat markets, the use of "double dose" collection methods and other alternative collection procedures in Europe and Japan has increased. Doubledose collections involve collecting two therapeutic platelet doses from one donor. The adoption of double dose collection technology is increasing and hasnegatively impacted our sales and gross profit in a number of markets where these collections are prevalent. In Japan, usage of double dose collections hasincreased significantly and comprised approximately 40% of all platelets collected. We expect to see continued increases in the use of double dosecollections during fiscal 2018.23Table of ContentsMarket TrendsPlasma MarketThere are two key aspects to the market for our plasma products - the growth in demand for plasma-derived biopharmaceuticals and the limited number ofsignificant biopharmaceutical companies in this market.Changes in demand for plasma-derived biopharmaceuticals, particularly immunoglobulin, are the key driver of plasma collection volumes in thebiopharmaceutical market. Various factors related to the supply of plasma and the production of plasma-derived biopharmaceuticals also affect collectionvolume, including the following:•Biopharmaceutical companies are seeking more efficient production processes to meet growing demand for biopharmaceuticals without requiring anequivalent increase in plasma supply.•Newly approved indications for, and the growing understanding and thus diagnosis of auto-immune diseases treated with plasma-derived therapiesincrease the demand for plasma, as do longer lifespans and a growing aging patient population.•Several blood collectors supply additional plasma to fractionators, and thus plasma supply can rise overall but not directly impact our Plasmabusiness unit.•Geographical expansion of biopharmaceuticals also increases demand for plasma.Demand for our plasma products in fiscal 2017 continued to grow in North America as collection volumes benefited from an expanding end user market forplasma-derived biopharmaceuticals with U.S. produced plasma meeting an increasing percentage of plasma volume demand worldwide.Despite the overall growth in the market, the number of biopharmaceutical companies who fractionate plasma is limited and industry consolidation is stillongoing. With these factors, we do not expect meaningful new entries or diversification.Hospital MarketHemostasis Management Market - Our TEG® (Thrombelastograph Hemostasis) Analyzers are diagnostic tools which provide a comprehensive assessment of apatient’s overall hemostasis. This information enables caregivers to decide the best blood-related clinical treatment for the patient in order to minimize bloodloss and reduce clotting risk. The use of our TEG® 5000 analyzer continues to expand beyond cardiac surgery into trauma and other clinical uses.TEG® product line sales further strengthened in fiscal 2017, with strong performance in North America, Europe and China. This product’s growth isdependent on hospitals adopting this technology in their blood management programs. The TEG® 6s and TEG® Manager are approved for the same set ofindications as the TEG® 5000 in Europe, Australia and Japan. In the U.S., TEG® 6s is approved for limited indications, including cardiovascular surgery andcardiology. The release of TEG 6s has significantly contributed to the overall growth in Hemostasis Management in the U.S. and Europe in fiscal 2017. Weare pursuing a broader set of indications for the TEG® 6s in the U.S., including trauma.Cell Processing Market - Our Cell Saver surgical blood salvage system was designed as a solution for procedures that involve mid to high volume blood loss,such as cardiovascular or orthopedic surgeries. In recent years, more efficient blood use and less invasive cardiovascular surgeries have reduced demand forthis device and contributed to intense competition in mature markets, while increased access to healthcare in emerging economies has provided new marketsand sources of growth.Our OrthoPAT technology is used to salvage red cells in orthopedic procedures, including hip and knee replacement surgeries. Over the last three years,improved blood management practices, including the use of tranexamic acid to treat and prevent post-operative bleeding, have significantly reduced the useof OrthoPAT.We currently participate in the hospital software market primarily in the U.S and Europe. In the U.S., we have experienced growth in our installed base for ourhospital transfusion solution, SafeTrace Tx, due to demand for reliable, proven safety systems within transfusion services. However, growth in the U.S.continues to be constrained due to hospital IT organization focus on the electronic medical records mandates. Revenues from BloodTrack, a blood inventoryand transfusion management system, have increased in the U.S. and Europe recently as hospitals seek means to improve efficiencies and meet complianceguidelines for tracking and dispositioning blood components to patients.Blood Center MarketIn the Blood Center market, we sell products used in the collection of platelets, red cells and whole blood. Whole blood is collected from the donor and thentransported to a laboratory where it is separated into its components: red cells, platelets or plasma. While we sell products around the world, a significantportion of our sales are to a limited number of customers due to relatively limited number of blood collectors.24Table of ContentsPlatelets are collected globally, although each local market can be quite different. Despite modest increases in the demand for platelets in Europe and Japan,improved collection efficiencies that increase the yield of platelets per collection and more efficient use of collected platelets have resulted in a flat marketfor automated collections and related disposables in these countries. In particular, the use of "double dose" collection methods in Europe and Japan hasincreased. Double dose collections involve collecting two therapeutic platelet doses from one donor. Competition in double dose collection technology isintense and can negatively impact our sales in markets where these collections are prevalent.In addition to changes in the platelet markets, healthcare efficiencies in developed markets have reduced the demand for red cells, which in turn can reducethe demand for our red cell and whole blood collection products.As discussed in Recent Developments above, while we began to see a moderation in the rate of market decline in U.S. blood center collections during fiscal2017, we expect to see continued declines in transfusion rates and the market to remain price-focused and highly competitive for the foreseeable future.In the Blood Center market for software, we currently participate most actively in the U.S., where expansion to new or emerging technology platforms such asour El Dorado Donor has been slow due to industry consolidation and the relatively high cost of migrating to new information technology platforms. Thistrend has limited revenue growth and will likely continue to minimize potential opportunities in the future. However, in the immediate future high switchingcosts and recurring maintenance revenue streams from existing customers has provided relative revenue stability in this product group.25Table of ContentsFinancial Summary(In thousands, except per share data)2017 2016 2015 % Increase/(Decrease) 17 vs. 16 % Increase/(Decrease) 16 vs. 15Net revenues$886,116 $908,832 $910,373 (2.5)% (0.2)%Gross profit$378,494 $405,914 $434,418 (6.8)% (6.6)%% of net revenues42.7 % 44.7 % 47.7% Operating expenses$397,875 $449,856 $393,878 (11.6)% 14.2 %Operating (loss) income$(19,381) $(43,942) $40,540 (55.9)% n/m% of net revenues(2.2)% (4.8)% 4.5% Other expense, net$(8,095) $(9,474) $(9,375) (14.6)% 1.1 %(Loss) income before taxes$(27,476) $(53,416) $31,165 (48.6)% n/m(Benefit) provision for income tax$(1,208) $2,163 $14,268 n/m (84.8)%% of pre-tax income4.4 % (4.0)% 45.8% Net (loss) income$(26,268) $(55,579) $16,897 (52.7)% n/m% of net revenues(3.0)% (6.1)% 1.9% Net (loss) income per share - diluted$(0.51) $(1.09) $0.32 (53.2)% n/mOur fiscal year ends on the Saturday closest to the last day of March. Fiscal 2017 and 2015 include 52 weeks with each quarter having 13 weeks. Fiscal 2016includes 53 weeks with each of the first three quarters having 13 weeks and the fourth quarter having 14 weeks.Net revenues for fiscal 2017 decreased 2.5% compared to fiscal 2016. Without the effects of foreign exchange, net revenues decreased 1.2% compared tofiscal 2016. Revenue increases in Plasma and Hemostasis Management were offset by declines in our Blood Center and Cell Processing business units for thefiscal year ended April 1, 2017. The 53rd week in fiscal 2016 also contributed to the decrease, as it accounted for approximately 2% of additional revenue ascompared to fiscal 2017.Net revenues for fiscal 2016 were flat compared to fiscal 2015. Without the effects of foreign exchange, net revenues increased 2.9% compared to fiscal 2015.Revenue increases in Plasma and Hemostasis Management were offset by declines in our Blood Center and Cell Processing business units for the fiscal yearended April 2, 2016. The 53rd week in fiscal 2016 also contributed to the increase, as it accounted for approximately 2% of additional revenue as comparedto fiscal 2015.During fiscal 2017, operating loss decreased 55.9% compared to fiscal 2016. Without the effects of foreign currency, operating loss decreased 68.9%compared to fiscal 2016. Operating loss decreased primarily as a result of savings realized from cost reduction initiatives in the current year, a decrease ingoodwill and other asset impairment charges and a reduction in research and development spending as compared to fiscal 2016. These savings were partiallyoffset by increased inventory charges and reserves and losses from Plasma liquid solutions.We recorded an operating loss in fiscal 2016, as compared to operating income in fiscal 2015. Operating income decreased for the fiscal year ended April 2,2016 primarily as a result of goodwill and other asset impairment charges recognized in the second half of fiscal 2016. This increase in operating expenseswas partially offset by reductions in restructuring and turnaround expenses in fiscal 2016 as compared to fiscal 2015.Net loss decreased 52.7% during fiscal 2017. Without the effects of foreign exchange, net loss decreased 63.6% for fiscal 2017. The decrease in net loss wasprimarily attributable to the decrease in operating loss described above and a tax benefit in fiscal 2017 compared to a tax expense in fiscal 2016.We recorded a net loss in fiscal 2016, as compared to net income in fiscal 2015. The change in net loss is primarily attributable to the decrease in operatingincome described above, partially offset by a decrease in the income tax provision in fiscal 2016 as compared to fiscal 2015.26Table of ContentsManagement's Use of Non-GAAP MeasuresManagement uses Non-GAAP financial measures, in addition to financial measures in accordance with accounting principles generally accepted in theUnited States of America (U.S. GAAP), to evaluate our operating results. These non-GAAP financial measures should be considered supplemental to, and nota substitute for, our reported financial results prepared in accordance with U.S. GAAP. Constant currency growth, a non-GAAP financial measure, measuresthe change in sales between the current and prior year periods using a constant currency conversion rate. We have provided this non-GAAP financial measurebecause we believe it provides meaningful information regarding our results on a consistent and comparable basis for the periods presented.RESULTS OF OPERATIONSNet Revenues by Geography Fiscal Year Fiscal 2017 versus 2016 Fiscal 2016 versus 2015(In thousands)2017 2016 2015 %Increase/(decrease) Currencyimpact Constantcurrencygrowth (1) %Increase/(decrease) Currencyimpact Constantcurrencygrowth (1)United States$522,686 $519,440 $494,788 0.6 % — % 0.6 % 5.0 % — % 5.0%International363,430 389,392 415,585 (6.7)% (3.1)% (3.6)% (6.3)% (6.8)% 0.5%Net revenues$886,116 $908,832 $910,373 (2.5)% (1.3)% (1.2)% (0.2)% (3.1)% 2.9%(1) Constant currency growth, a non-GAAP financial measure, measures the change in sales between the current and prior year periods using a constant currency. See "Management'sUse of Non-GAAP Measures."International Operations and the Impact of Foreign ExchangeOur principal operations are in the United States, Europe, Japan and other parts of Asia. Our products are marketed in approximately 100 countries around theworld through a combination of our direct sales force and independent distributors and agents.The percentage of revenue generated in our principle operating regions is summarized below:2017 2016 2015United States59.0% 57.2% 54.4%Japan9.0% 9.0% 9.7%Europe18.7% 20.7% 23.7%Asia12.4% 12.3% 11.2%Other0.9% 0.8% 1.0%Total100.0% 100.0% 100.0%International sales are generally conducted in local currencies, primarily the Japanese Yen, the Euro, the Chinese Yuan and the Australian Dollar. Our resultsof operations are impacted by changes in foreign exchange rates, particularly in the value of the Yen, the Euro and Australian Dollar relative to theU.S. Dollar.We have placed foreign currency hedges based on estimates of future revenues to reduce the impacts of currency fluctuations. As compared to fiscal 2016, theeffects of foreign exchange resulted in a 1.3% decrease in sales in fiscal 2017. The primary reason is the relative strength of the U.S. Dollar to the JapaneseYen and Euro. We expect this relative strength of the U.S. Dollar to the Euro to continue to negatively impact operating income in fiscal 2018. For fiscal2016, as compared to fiscal 2015, the effects of foreign exchange accounted for a 3.1% decrease in sales.Please see section entitled “Foreign Exchange” in this discussion for a more complete explanation of how foreign currency affects our business and ourstrategy for managing this exposure.27Table of ContentsNet Revenues by Business Unit Fiscal Year Fiscal 2017 versus 2016 Fiscal 2016 versus 2015(In thousands) 2017 2016 2015 %Increase/(decrease) Currencyimpact Constantcurrencygrowth (1) %Increase/(decrease) Currencyimpact Constantcurrencygrowth (1)Plasma $410,727 $381,776 $352,911 7.6% (1.0)% 8.6% 8.2% (2.7)% 10.9%Blood Center 303,890 355,108 386,147 (14.4)% (0.9)% (13.5)% (8.0)% (3.2)% (4.8)%Cell Processing 105,376 112,483 120,434 (6.3)% (2.5)% (3.8)% (6.6)% (4.4)% (2.2)%HemostasisManagement 66,123 59,465 50,881 11.2% (2.6)% 13.8% 16.9% (1.8)% 18.7%Net revenues $886,116 $908,832 $910,373 (2.5)% (1.3)% (1.2)% (0.2)% (3.1)% 2.9%(1) Constant currency growth, a non-GAAP financial measure, measures the change in sales between the current and prior year periods using a constant currency. See"Management's Use of Non-GAAP Measures."PlasmaPlasma revenue increased 7.6% during fiscal 2017 compared to fiscal 2016. Without the effect of foreign exchange, Plasma revenue increased 8.6% duringfiscal 2017. The revenue growth was primarily driven by an increase in sales of Plasma disposables during fiscal 2017. This growth was the result ofcontinued strong performance in the U.S. and includes the impact of increased sales of Plasma liquid solutions, which contributed approximately $16 millionto the growth.Plasma revenue increased 8.2% during fiscal 2016 compared to fiscal 2015. Without the effect of foreign exchange, Plasma revenue increased 10.9% duringfiscal 2016. The revenue growth was primarily driven by an increase in sales of Plasma disposables during fiscal 2017 due to the implementation of a liquidsolutions contract with a large U.S. collector customer and strong performance in Japan and other parts of Asia. This growth was partially offset by reductionsrelated to market conditions in Russia.We are experiencing delays in the expansion of our liquid solutions production capacity that have required us and our customers to obtain alternativesources of supply. We expect purchases from these alternate sources to continue until we can complete the expansion and produce solutions at the necessarylevel. While these purchases continue, we will see a reduction in revenue from our liquid solutions business and may see increased costs to serve ourcustomers.Blood CenterPlateletPlatelet revenue decreased by 17.4% during fiscal 2017 compared to fiscal 2016. Without the effect of foreign exchange, platelet revenue decreased 16.4%during fiscal 2017. The decrease, excluding the impact of foreign exchange, was primarily the result of the continued market shift toward double dosecollection techniques in Japan. Order timing in Asia and the Middle East also contributed to the decline.Platelet revenue decreased 6.1% during fiscal 2016 compared to fiscal 2015. Without the effects of foreign exchange, platelet revenue decreased 0.8% duringfiscal 2016. The decrease in platelet revenue during fiscal 2016, excluding the impact of foreign exchange, was primarily the result of declines in sales inRussia and Latin America. These declines were partially offset by growth in China, India, the Middle East, and other parts of Asia.Red Cell and Whole BloodRed cell revenue decreased 22.7% during fiscal 2017 compared to fiscal 2016. Without the effect of foreign exchange, red cell revenue decreased 22.1%during fiscal 2017. The decrease was primarily driven by price reductions in our principle red cell market in the U.S., which was largely attributable to thecontract we entered into with the American Red Cross during the second quarter of fiscal 2016, and the selection of competitive technologies by BloodCenter GPOs, as discussed above. We continue to expect revenue and operating income to decline as a result of these factors.28Table of ContentsRed cell revenue decreased 8.1% during fiscal 2016 compared to fiscal 2015. Without the effects of foreign exchange, red cell revenue decreased 7.0%during fiscal 2016. The decrease was driven by price reductions in our principal U.S. red cell market. During fiscal 2016, U.S. blood collection groupspursued contractual arrangements for apheresis red cell collections with the objective of standardizing their collection technology and securing pricereductions. These arrangements, most notably the contract with the American Red Cross as discussed above, began to negatively affect red cell revenues andgross margins during the second quarter of fiscal 2016.Whole blood revenue decreased 9.9% during fiscal 2017 compared to fiscal 2016. Without the effect of foreign exchange, whole blood revenue decreased8.9% during fiscal 2017. While whole blood revenue decreased as compared to the prior year periods, we began to see a moderation in the rate of decline ofthis market during fiscal 2017. We expect to see continued declines in transfusion rates and the market to remain price-focused and highly competitive forthe foreseeable future.Whole blood revenue decreased 10.7% during fiscal 2016 compared to fiscal 2015. Without the effect of foreign exchange, whole blood revenue decreased8.4% during fiscal 2016. Whole blood disposables revenue for fiscal 2016 decreased primarily due to a declining U.S. whole blood market. The anniversaryof the loss of the American Red Cross whole blood business occurred at the end of the first quarter of fiscal 2016, however, we continued to be negativelyimpacted by the declining market.Software, Equipment and OtherBlood Center software, equipment and other revenue decreased 10.6% during fiscal 2017 compared to fiscal 2016. Without the effect of foreign exchange,software, equipment and other revenue decreased 10.4% during fiscal 2017. These decreases were largely attributable to the expiration and non-renewal of aU.S. government software contract.Blood Center software, equipment and other revenue decreased 6.1% during fiscal 2016 compared to fiscal 2015. Without the effect of foreign exchange,software, equipment and other revenue decreased 3.8% during fiscal 2016. The decrease in revenue was primarily due to a rebate assessed by the Italiangovernment and declines in Russia and Japan. The decline in Russia was due to the Russian market suspending all equipment purchasing in fiscal 2016 andthe decline in Japan was a result of lower platelet equipment sales. These declines were partially offset by increases in red cell equipment revenue in the U.S.and the finalization of services under a contract with the U.S. Department of Defense in fiscal 2016.Cell ProcessingCell SalvageCell Salvage revenues consist primarily of the Cell Saver and OrthoPAT products. Revenues from OrthoPAT decreased 18.3% during fiscal 2017 compared tofiscal 2016. Without the effect of foreign exchange, OrthoPAT disposables revenue decreased 15.6% during fiscal 2017. Better blood management,particularly the adoption of tranexamic acid to treat and prevent orthopedic post-operative blood loss, continue to lessen hospital use of OrthoPAT. CellSaver revenue declined 6.3% during fiscal 2017 compared to fiscal 2016. Without the effect of foreign exchange, Cell Saver revenue decreased 3.7% duringfiscal 2017. This decrease was due to declines in Europe, mainly Russia, partially offset by growth in China.Revenues from OrthoPAT decreased 31.9% during fiscal 2016 compared to fiscal 2015. Without the effect of foreign exchange, OrthoPAT disposablesrevenue decreased 28.7% during fiscal 2016 as better blood management has reduced orthopedic blood loss and demand for OrthoPAT disposables. Certaintrends in blood management, particularly the adoption of tranexamic acid to treat and prevent orthopedic post-operative blood loss, have continued toreduce hospital use of OrthoPAT disposables. Cell Saver revenue declined 4.2% during fiscal 2016 compared to fiscal 2015. Without the effect of foreignexchange, Cell Saver revenue increased 1.0% during fiscal 2016. The increase in Cell Saver revenue was primarily attributable to modest growth in Japan andin the emerging markets in Russia and China.Transfusion ManagementCell Processing software revenue includes BloodTrack®, SafeTrace Tx®, and other hospital software. Revenues from Cell Processing software decreased 3.3%during fiscal 2017 compared to fiscal 2016. Without the effect of foreign exchange, Cell Processing software revenue decreased by 1.2% during fiscal 2017.Revenues were similar in fiscal 2017 and 2016 except for the recognition of previously deferred revenue associated with one of our largest customers in fiscal2016.Cell Processing software revenue increased 5.8% during fiscal 2016 compared to fiscal 2015. Without the effect of foreign exchange, Cell Processingsoftware revenue increased by 10.5% during fiscal 2016, the growth in software revenues in fiscal 2016 was driven by the recognition of previously deferredrevenue associated with one of our largest customers, BloodTrack growth in Europe, and increased software support service revenue. This growth waspartially offset by declines in BloodTrack revenue in the U.S. and lower EdgeSuite system installs in Europe.29Table of ContentsHemostasis ManagementRevenue from our Hemostasis Management products increased 11.2% during fiscal 2017 compared to fiscal 2016. Without the effect of foreign exchange,Hemostasis Management revenues increased 13.8% during fiscal 2017. The revenue increase was primarily attributable to the growth of TEG disposables,principally in the U.S. and China. The TEG® 6s and TEG® Manager are approved for the same set of indications as the TEG® 5000 in Europe, Australia andJapan. In the U.S., TEG® 6s is approved for limited indications, including cardiovascular surgery and cardiology. The release of TEG 6s has significantlycontributed to the overall growth in Hemostasis Management in the U.S. and Europe in fiscal 2017. We are pursuing a broader set of indications for the TEG®6s in the U.S., including trauma.Revenue from our Hemostasis Management products increased 16.9% during fiscal 2016 compared to fiscal 2015. Without the effect of foreign exchange,Hemostasis Management revenues increased 18.7% during fiscal 2016. The revenue increase is due to continued adoption of our hemostasis system,principally in the U.S. and China.Gross Profit(In thousands)2017 2016 2015 % Increase/(Decrease) 17 vs. 16 % Increase/(Decrease) 16 vs. 15Gross profit$378,494 $405,914 $434,418 (6.8)% (6.6)%% of net revenues42.7% 44.7% 47.7% Our gross profit decreased 6.8% during fiscal 2017. Without the effects of foreign exchange, gross profit decreased 4.3% during fiscal 2017. Our gross profitmargin percentage decreased by 200 basis points for fiscal 2017 as compared to fiscal 2016. The decrease in the gross profit margin during fiscal 2017 wasprimarily due to inventory reserves and impairment charges recorded during fiscal 2017, losses from Plasma liquid solutions, and price reductions in ourBlood Center business. The negative impact of foreign exchange and the 53rd week in the prior year period as well as the effect of the Whole Blood filterrecall also contributed to the overall decline. These decreases were partially offset by cost savings initiatives and a reduction in restructuring and turnaroundcosts. Gross profit margin continues to be impacted by the inefficiency of underutilized productive capacity.As discussed above, we are experiencing delays in the expansion of our liquid solutions production capacity that have required us and our customers toobtain alternative sources of supply. We expect purchases from these alternate sources to continue until we can complete the expansion and producesolutions at the necessary level. While these purchases continue, we will continue to incur additional costs, including potential penalties resulting fromcontractual obligations to our customers.Our gross profit decreased 6.6% during fiscal 2016. Without the effects of foreign exchange, gross profit decreased 2.0% during fiscal 2016. Our gross profitmargin percentage decreased by 300 basis points for fiscal 2016 as compared to fiscal 2015. The decrease in gross profit margin during fiscal 2016 wasprimarily due to the effect of foreign exchange, inventory related charges of $9.4 million and impairment of assets of $8.8 million. Product mix, includingPlasma disposables, price reductions in our Blood Center business, and the amortization of software development costs in the early stages of productlaunches also negatively impacted gross profit. These declines were partially offset by cost savings from productivity programs.Operating Expenses(In thousands)2017 2016 2015 % Increase/(Decrease) 17 vs. 16 % Increase/(Decrease) 16 vs. 15Research and development$37,556 $44,965 $54,187 (16.5)% (17.0)%% of net revenues4.2% 4.9 % 6.0 % Selling, general and administrative$301,726 $317,223 $337,168 (4.9)% (5.9)%% of net revenues34.1% 34.9 % 37.0 % Impairment of assets$58,593 $92,395 $5,441 (36.6)% n/m% of net revenues6.6% 10.2 % 0.6 % Contingent consideration income$— $(4,727) $(2,918) (100.0)% 62.0 %% of net revenues—% (0.5)% (0.3)% Total operating expenses$397,875 $449,856 $393,878 (11.6)% 14.2 %% of net revenues44.9% 49.5 % 43.3 % 30Table of ContentsResearch and DevelopmentResearch and development expenses decreased 16.5% during fiscal 2017. Without the effects of foreign exchange, research and development expensesdecreased 16.6% during fiscal 2017. The decrease in fiscal 2017 was primarily driven by reduced spending on several projects in our Blood Center businessunit to better align with our long-term product plans and global strategic review. Changes in the timing of spending from fiscal 2017 to fiscal 2018 alsocontributed to the decline. This decrease was partially offset by increased restructuring and turnaround costs. We will continue to invest resources in clinicalprograms for our Hemostasis Management business unit, most notably a global registry study for our TEG® platform.Research and development expenses decreased 17.0% during fiscal 2016. Without the effect of foreign exchange, research and development expensesdecreased 15.7% during fiscal 2016. The decrease in fiscal 2016 was primarily the result of a reduction in restructuring and turnaround costs of $10.9 million,partially offset by increased activities for several projects designed to support our long-term product plans and to increase our competitiveness.Selling, General and AdministrativeDuring fiscal 2017, selling, general and administrative expenses decreased 4.9% with and without the effects of foreign exchange. The decrease in fiscal 2017was primarily the result of cost reduction initiatives and a reduction in restructuring and turnaround costs. This decrease was partially offset by an increase invariable compensation.During fiscal 2016, selling, general and administrative expenses decreased 5.9%. Without the effects of foreign exchange, selling, general and administrativeexpenses decreased 2.3% during fiscal 2016. The decrease in fiscal 2016 was primarily the result of reductions in restructuring and turnaround costs of $12.8million and decreased variable compensation. This decrease was partially offset by increased spending in sales and marketing activities related to Plasma andincreased spending as a result of the extra week in fiscal 2016.Impairment of AssetsWe recorded asset impairments of $58.6 million in fiscal 2017 primarily consisting of $57.0 million of goodwill impairment, $0.8 million of intangible assetimpairments and $0.8 million of property, plant and equipment impairments.We recorded asset impairments of $92.4 million in fiscal 2016 primarily consisting of $66.3 million of goodwill impairment, $19.2 million of intangibleasset impairments and $6.9 million of property, plant and equipment impairmentsWe recorded asset impairments of $5.4 million in fiscal 2015 associated with exit activities related to prior year manufacturing and integration initiatives.Other Expense, NetOther expense, net, decreased 14.6% during fiscal 2017 as compared to fiscal 2016 and increased 1.1% during fiscal 2016 as compared to fiscal 2015. Interestexpense from our term loan borrowings constitutes the majority of expense reported in all periods. The effective interest rate on total debt outstanding for thefiscal year ended April 1, 2017 was approximately 2.25%.Taxes 2017 2016 2015 % Increase/(Decrease) 17 vs. 16 % Increase/(Decrease) 16 vs. 15Reported income tax rate4.4% (4.0)% 45.8% 8.4% (49.8)%Reported Tax RateWe conduct business globally and as a result report our results of operations in a number of foreign jurisdictions and the United States. Historically, ourreported tax rate was lower than the U.S. statutory tax rate due primarily to our jurisdictional mix of earnings as the income earned in our foreign subsidiariesis generally taxed at a lower tax rate. In fiscal 2015, we established a valuation allowance against our U.S. deferred tax assets that are not more-likely-than-notrealizable due to cumulative losses in the U.S. In fiscal 2017, we established a valuation allowance against our net deferred tax assets in four additionaljurisdictions. These jurisdictions are located in the countries of Switzerland, Puerto Rico, Luxembourg, and France. The decision to establish a valuationallowance in these additional jurisdictions was largely based upon our worldwide cumulative loss position, resulting from significant impairment andrestructuring charges incurred in fiscal 2017 and 2016.We continue to maintain a valuation allowance against our net U.S. deferred tax assets and net deferredtax assets of certain foreign subsidiaries.For the year ended April 1, 2017, we recorded an income tax benefit of $1.2 million on our worldwide pre-tax loss of $27.5 million, resulting in a reported taxrate of 4.4%. Our current tax rate is higher than our tax rate of (4.0)% and lower than our tax rate of 45.8% for the years ended April 2, 2016 and March 28,2015, respectively. Our increase in tax rate for fiscal 2017, as31Table of Contentscompared to fiscal 2016, is primarily a result of the establishment of valuation allowances in foreign jurisdictions and current year goodwill impairments forwhich there was no tax basis. The fiscal 2015 rate was significantly larger than the fiscal 2016 tax rate, as we established a valuation allowance against themajority of our U.S. deferred tax assets.Liquidity and Capital ResourcesThe following table contains certain key performance indicators we believe depict our liquidity and cash flow position:(In thousands)April 1, 2017 April 2, 2016Cash and cash equivalents$139,564 $115,123Working capital$298,850 $302,535Current ratio2.4 2.6Net debt position(1)$(175,083) $(292,877)Days sales outstanding (DSO)60 58Disposables finished goods inventory turnover4.2 4.6(1)Net debt position is the sum of cash and cash equivalents less total debt.In fiscal 2017, we launched a multi-year restructuring initiative designed to reposition our organization and improve our cost structure. During fiscal 2017,we incurred $28.7 million of restructuring and turnaround charges under the initial phase of this initiative. As of April 1, 2017, this initial phase wassubstantially complete. We continue to assess non-core and underperforming assets and evaluate opportunities to improve our cost structure as part of ourturnaround and expect to incur additional charges and benefits during fiscal 2018 and beyond.As of April 1, 2017, we had $139.6 million in cash and cash equivalents, substantially held in the U.S. or in countries from which it can be freely repatriatedto the U.S. We entered into a credit agreement ("Credit Agreement") with certain lenders (together, “Lenders”) which provided for a $475.0 million term loan("Term Loan") and a $100.0 million revolving loan ("Revolving Credit Facility" and together with the Term Loan, the "Credit Facilities"). The CreditFacilities matures on July 1, 2019. At April 1, 2017, $315.4 million was outstanding under the Term Loan and no amount was outstanding on the RevolvingCredit Facility. We also have $46.9 million of uncommitted operating lines of credit to fund our global operations and there are no outstanding borrowingsas of April 1, 2017.The Credit Facilities contains covenants that limit the use of cash and require us to maintain certain financial ratios. Any failure to comply with the financialor operating covenants of the Credit Facilities would prevent us from borrowing under the Revolving Credit Facility and would constitute a default, whichcould result in, among other things, the amounts outstanding including all accrued interest and unpaid fees, becoming immediately due and payable. As ofApril 1, 2017, we were in compliance with all covenants.Our primary sources of liquidity are cash and cash equivalents, internally generated cash flow from operations and proceeds from employee stock optionexercises. Although cash flow from operations could be negatively impacted by continued declines in our Blood Center business, we believe these sourcesare sufficient to fund our cash requirements over at least the next twelve months. Our expected cash outlays relate primarily to investments, capitalexpenditures, including the PCS® 300, cash payments under the loan agreement, restructuring and turnaround initiatives and other acquisitions. These aredescribed in more detail in Contractual Obligations below.32Table of ContentsCash Flow Overview(In thousands)2017 2016 2015 Increase/(Decrease) 17 vs. 16 Increase/(Decrease) 16 vs. 15Net cash provided by (used in): Operating activities$159,738 $121,865 $127,178 $37,873 $(5,313)Investing activities(73,313) (104,768) (121,768) (31,455) (17,000)Financing activities(60,413) (62,624) (33,160) (2,211) 29,464Effect of exchange rate changes on cash and cashequivalents(1)(1,571) (12) (4,057) (1,559) 4,045Net increase (decrease) in cash and cash equivalents$24,441 $(45,539) $(31,807) (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 haveeliminated the effect of foreign currency throughout our cash flow statement, except for its effect on our cash and cash equivalents.Operating ActivitiesNet cash provided by operating activities was $159.7 million during fiscal 2017, an increase of $37.9 million as compared to fiscal 2016. Cash provided byoperating activities increased primarily due to an increase in accounts payable and accrued expenses which was driven largely by an increase in variablecompensation and an accrual recorded in fiscal 2017 for the product recall claims. The increase in cash provided by operating activities was partially offsetby an increase in other current assets including a receivable related to stock options exercised near the period end date and an insurance receivable associatedwith the product recall.Net cash provided by operating activities was $121.9 million during fiscal 2016, a decrease of $5.3 million as compared to fiscal 2015. Cash provided byoperating activities decreased primarily due to a working capital outflow. The working capital outflow was primarily attributable to a decrease in accountspayable and accrued expenses, driven largely by a reduction in restructuring reserves, accrued bonuses, accruals related to the construction of facilities andlicensing agreements, and a decrease in accrued payroll due to the 53rd week. Also contributing to the reduction in cash provided by operating activities wasan increase in accounts receivable from fiscal 2015 to fiscal 2016. The decrease in cash provided by operating activities was partially offset by lowerinventory driven by our global strategic review, which included a global inventory reduction initiative during fiscal 2016.Investing ActivitiesNet cash used in investing activities was $73.3 million during fiscal 2017, a decrease of $31.5 million as compared to fiscal 2016. The decrease in cash usedin investing activities was largely the result of a reduction in capital expenditures of $26.3 million in fiscal 2017 as compared to fiscal 2016 primarily due tothe completion of certain manufacturing initiatives in the prior year and decreased spending in capitalized research and development projects. Acquisitioncosts of $3.0 million incurred in fiscal 2016 also contributed to the decrease.Net cash used in investing activities was $104.8 million during fiscal 2016, a decrease of $17.0 million as compared to fiscal 2015. The decrease in cash usedin investing activities was the result of a reduction in capital expenditures in fiscal 2016 related to manufacturing operations under construction in Malaysiaand Tijuana, which have been substantially completed. During fiscal 2015, cash used in investing activities included significant costs related to plantconstruction activities in Malaysia and Tijuana and the purchase of two previously leased facilities, our manufacturing facility in Salt Lake City and anadministrative office at our corporate headquarters in Braintree, Massachusetts.Financing ActivitiesNet cash used in financing activities was $60.4 million during fiscal 2017, a decrease of $2.2 million as compared to fiscal 2016, primarily due to $61.0million of share repurchases and $21.3 million principal repayments on our Term Loan in the prior year. Fiscal 2017 also benefited by an incremental $15.4million of proceeds from the exercise of stock options over the prior year. These decreases in net cash used in financing activities were partially offset by areduction in borrowings on our Revolving Credit Facility of $50.0 million and $42.7 million principal repayments on our Term Loan in fiscal 2017.33Table of ContentsNet cash used in financing activities was $62.6 million during fiscal 2016, an increase of $29.5 million as compared to fiscal 2015 primarily due to $61.0million of share repurchases during fiscal 2016 compared to $39.0 million of share repurchases during fiscal 2015. Higher term loan payments of $12.8million also contributed to the increase. This was partially offset by an increase in short-term loans and an increase in proceeds from the exercise of stockoptions.Contractual ObligationsA summary of our contractual and commercial commitments as of April 1, 2017 is as follows: Payments Due by Period(In thousands)Total Less than 1 year 1-3 years 3-5 years More than 5 yearsDebt$314,648 $61,022 $253,591 $35 $—Operating leases19,546 4,298 4,872 3,345 7,031Purchase commitments(1)105,004 100,295 4,709 — —Expected retirement plan benefit payments14,138 1,396 2,845 3,028 6,869Total contractual obligations$453,336 $167,011 $266,017 $6,408 $13,900(1) Includes amounts we are committed to spend on purchase orders entered in the normal course of business for capital equipment and for the purpose ofmanufacturing our products including contract manufacturers, specifically JMS Co. Ltd., Kawasumi Laboratories and Sanmina Corporation for themanufacture of certain disposable products and equipment. The majority of our operating expense spending does not require any advance commitment.The above table does not reflect our long-term liabilities associated with unrecognized tax benefits of $3.4 million recorded in accordance with ASC Topic740, Income Taxes. We cannot reasonably make a reliable estimate of the period in which we expect to settle these long-term liabilities due to factors outsideof our control, such as tax examinations.We anticipate paying an additional $17.8 million upon replication and delivery of certain manufacturing assets of Pall Corporation's filter media business toHaemonetics by fiscal 2019.Concentration of Credit RiskWhile approximately 33% of our revenue is generated by our five largest customers, concentrations of credit risk with respect to trade accounts receivable aregenerally limited due to our large number of customers and their diversity across many geographic areas. A portion of our trade accounts receivable outsidethe United States, however, include sales to government-owned or supported healthcare systems in several countries, which are subject to payment delays andlocal 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 availabilityof government funding and reimbursement practices. If the financial condition of customers or the countries' healthcare systems deteriorate such that theirability to make payments is uncertain, allowances may be required in future periods.Legal ProceedingsWe are presently engaged in various legal actions, and although our ultimate liability cannot be determined at the present time, we believe, based onconsultation with counsel, that any such liability will not materially affect our consolidated financial position or our results of operations.Italian Employment LitigationOur Italian manufacturing subsidiary is party to several actions initiated by former employees of our facility in Ascoli-Piceno, Italy. We ceased operations atthe facility in fiscal 2014 and sold the property in fiscal 2017. These include actions claiming (i) working conditions and minimum salaries should have beenestablished by either a different classification under their national collective bargaining agreement or a different agreement altogether, (ii) certain solidarityagreements, which are arrangements between the Company, employees and the government to continue full pay and benefits for employees who wouldotherwise be terminated in times of low demand, are void, and (iii) rights to payment of the extra time used for changing into and out of the working clothesat the beginning and end of each shift.In addition, a union represented in the Ascoli plant filed an action claiming that the Company discriminated against it in favor of three other representedunions by (i) interfering with an employee referendum, (ii) interfering with an employee petition to recall union representatives from office, and (iii)excluding the union from certain meetings.34Table of ContentsFinally, we have been added as defendants on claims filed against Pall Corporation prior to our acquisition of the plant in August 2012. These claims relateto agreements to "freeze" benefit allowances for a certain period in exchange for Pall's commitments on hiring and plant investment.As of April 1, 2017, the total amount of damages claimed by the plaintiffs in these matters is approximately $4.4 million. At this point in the proceedings, webelieve losses are unlikely and therefore no amounts have been accrued. In the future, we may receive adverse rulings from the courts which could change ourjudgment on these cases.SOLX ArbitrationIn July 2016, H2 Equity, LLC, formerly known as Hemerus Corporation, filed an arbitration claim for $17 million in milestone and royalty paymentsallegedly owed as part of our acquisition of the filter and storage solution business from Hemerus Medical, LLC ("Hemerus") in fiscal 2014. The acquiredstorage solution is referred to as SOLX.At the closing in April 2013, Haemonetics paid Hemerus a total of $24 million and agreed to a $3 million milestone payment due when the FDA approved anew indication for SOLX (the “24-Hour Approval”) using a filter acquired from Hemerus. We also agreed to make future royalty payments up to a cumulativemaximum of $14 million based on the sale of products incorporating SOLX over a ten year period.Due to performance issues with the Hemerus filter, Haemonetics filed for, and received, the 24-Hour Approval using a Haemonetics filter. Accordingly,Haemonetics did not pay Hemerus the $3 million milestone payment because the 24-Hour Approval was obtained using a Haemonetics filter, not a Hemerusfilter. In addition, we have not paid any royalties to date as we have not made any sales of products incorporating SOLX. H2 Equity claims, in part, that we owe them $3 million for the receipt of the 24-Hour Approval despite the use of a Haemonetics filter to obtain the approvaland that we have failed to make commercially reasonable efforts to market and sell products incorporating SOLX. We believe that we have meritoriousdefenses to these claims.It is not possible to accurately evaluate the likelihood or amount of any potential losses related to this claim and therefore no amounts have been accrued.InflationWe 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 tomitigate the effects of inflation by improving our manufacturing and purchasing efficiencies, by increasing employee productivity, and by adjusting theselling prices of products. We continue to monitor inflation pressures generally and raw materials indices that may affect our procurement and productioncosts. Increases in the price of petroleum derivatives could result in corresponding increases in our costs to procure plastic raw materials.Foreign ExchangeDuring fiscal 2017, 41.0% of our sales were generated outside the U.S., generally in foreign currencies, yet our reporting currency is the U.S. Dollar. We alsoincur certain manufacturing, marketing and selling costs in international markets in local currency. Our primary foreign currency exposures relate to salesdenominated in Euro, Japanese Yen, Chinese Yuan and Australian Dollars. We also have foreign currency exposure related to manufacturing and otheroperational costs denominated in Swiss Francs, Canadian Dollars, Mexican Pesos, and Malaysian Ringgit. The Yen, Euro, Yuan and Australian Dollar salesexposure 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 theU.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, CanadianDollars 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 weakensrelative 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 ofderivative financial instruments to minimize, for a period of time, the unforeseen impact on our financial results from changes in foreign exchange rates. Weutilize forward foreign currency contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, primarily Japanese Yenand Euro, and to a lesser extent Swiss Francs, Australian Dollars, Canadian Dollars, and Mexican Pesos. This does not eliminate the volatility of foreignexchange35Table of Contentsrates, but because we generally enter into forward contracts one year out, rates are fixed for a one-year period, thereby facilitating financial planning andresource allocation. These contracts are designated as cash flow hedges. The final impact of currency fluctuations on the results of operations is dependent onthe local currency amounts hedged and the actual local currency results.Recent Accounting PronouncementsStandards to be ImplementedRevenue from Contracts with Customers (Topic 606)In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No.2014-09 stipulates that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects theconsideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, an entity should apply thefollowing steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4)allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performanceobligation. ASU No. 2014-09 will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within thosereporting periods. Early adoption is permitted for annual reporting periods beginning after December 15, 2016, including interim reporting periods withinthat reporting period.In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (ReportingRevenue Gross versus Net). The purpose of ASU No. 2016-08 is to clarify the guidance on principal versus agent considerations. It includes indicators thathelp to determine whether an entity controls the specified good or service before it is transferred to the customer and to assist in determining when the entitysatisfied the performance obligation and as such, whether to recognize a gross or a net amount of consideration in their consolidated statement of operations.The effective date and transition requirements are consistent with ASU No. 2014-09.In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.The guidance clarifies that entities are not required to assess whether promised goods or services are performance obligations if they are immaterial in thecontext of the contract. ASU No. 2016-10 also addresses how to determine whether promised goods or services are separately identifiable and permits entitiesto make a policy election to treat shipping and handling costs as fulfillment activities. In addition, it clarifies key provisions in Topic 606 related tolicensing. The effective date and transition requirements are consistent with ASU No. 2014-09.We have established a cross-functional implementation team consisting of representatives from all of our business units and regions. During fiscal 2017, weanalyzed the impact of the standard on our contract portfolio by reviewing a representative sample of our contracts to identify potential differences thatwould result from applying the requirements of the new standard. The implementation team has apprised both management and the audit committee ofproject status on a recurring basis.We have not finalized our assessment of the impact of Topic 606, however we believe our recognition of software revenue will be the most impacted.Software revenue accounts for approximately 7.5% of the Company's total revenue. We continue to analyze performance obligations, variable considerationand disclosures. Additionally, we are monitoring updates issued by the FASB. During the first half of fiscal 2018, we expect to substantially complete ourimpact assessment and initiate efforts to redesign impacted processes, policies and controls.Other Recent Accounting PronouncementsIn January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assetsand Financial Liabilities. ASU No. 2016-01 requires entities to measure equity investments that do not result in consolidation and are not accounted forunder the equity method at fair value with changes recognized in net income. However, an entity may choose to measure equity investments that do not havereadily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions forthe identical or a similar investment of the same issuer. It also simplifies the impairment assessment of equity investments without readily determinable fairvalues by requiring a qualitative assessment to identify impairment. ASU No. 2016-01 also requires separate presentation of financial assets and financialliabilities by measurement category and form of financial asset and liability. ASU No. 2016-01 is effective for fiscal years beginning after December 15, 2017,including interim periods within those fiscal years. Early adoption of certain provisions is permitted. Management does not believe that the adoption of ASUNo. 2016-01 will have a material effect on our financial position or results of operations.In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU No. 2016-02 is intended to increase the transparency and comparabilityamong organizations by recognizing lease asset and lease liabilities on the balance sheet, including those previously classified as operating leases undercurrent U.S. GAAP, and disclosing key information about36Table of Contentsleasing arrangements. ASU No. 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.Earlier adoption is permitted. The impact of adopting ASU No. 2016-02 on our financial position and results of operations is being assessed by management.In March 2016, the FASB issued ASU No. 2016-09, Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based PaymentAccounting. The purpose of the update is to simplify several areas of the accounting for share-based payment transactions, including the income taxconsequences, classification of awards as either equity or liabilities, forfeiture accounting, and classification on the statement of cash flows. ASU No. 2016-09is effective for annual reporting periods after December 15, 2016, including interim periods within those fiscal periods. Early adoption is permitted.Management does not believe that the adoption of ASU No. 2016-09 will have a material effect on our financial position or results of operations.In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). The guidance requires that financial assets measured atamortized cost be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from theamortized cost basis. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected creditlosses during the period. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportableforecasts that affect the collectability of the reported amount. Credit losses relating to available-for-sale debt securities will be recorded through an allowancefor credit losses rather than as a direct write-down to the security. The updated guidance is effective for annual periods beginning after December 15, 2019,and is applicable to the Company in fiscal 2021. Early adoption is permitted. The impact of adopting ASU No. 2016-13 on our financial position and resultsof operations is being assessed by management.In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flow (Topic 230). The guidance reduces diversity in how certain cash receipts andcash payments are presented and classified in the Statements of Cash Flows. The guidance is effective for annual periods beginning after December 15, 2017,and is applicable to us in fiscal 2019. Early adoption is permitted. The adoption of ASU 2016-15 is not expected to have a material effect on our consolidatedfinancial statements.In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740). The guidance requires companies to recognize the income tax effects ofintercompany sales and transfers of assets, other than inventory, in the income statement as income tax expense (or benefit) in the period in which the transferoccurs. The guidance is effective for annual periods beginning after December 15, 2017, and is applicable to us in fiscal 2019. Early adoption is permitted forall entities as of the beginning of an annual reporting period. The impact of adopting ASU No. 2016-16 on our financial position and results of operations isbeing assessed by management.In January, 2017 the FASB issued ASU No. 2017-01, Business Combinations: Clarifying the Definition of a Business (Topic 805). The purpose of the updateis to change the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance is effectivefor annual periods beginning after December 15, 2017, and is applicable to us in fiscal 2018. Early adoption is permitted for all entities as of the beginning ofan annual reporting period. The impact of adopting ASU No. 2017-01 is not expected to have a material effect on our consolidated financial statements.In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715). The guidance revises the presentation of net periodicpension cost and net periodic post-retirement benefit cost. The guidance is effective for annual periods beginning after December 15, 2018, and is applicableto us in fiscal 2020. Early adoption is permitted for all entities as of the beginning of an annual reporting period. The impact of adopting ASU No. 2017-07 isnot expected to have a material effect on our consolidated financial statements.Critical Accounting PoliciesOur significant accounting policies are summarized in Note 2, Summary of Significant Accounting Policies, to our consolidated financial statementscontained in Item 8 of this Annual Report on Form 10-K. While all of these significant accounting policies impact our financial condition and results ofoperations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on ourfinancial statements and require management to use a greater degree of judgment and/or estimates. Actual results may differ from those estimates.The accounting policies identified as critical are as follows:Revenue RecognitionOur revenue recognition policy is to recognize revenues from product sales, software and services in accordance with ASC Topic 605, Revenue Recognition,and ASC Topic 985-605, Software. These standards require that revenues are recognized when37Table of Contentspersuasive evidence of an arrangement exists, product delivery, including customer acceptance, has occurred or services have been rendered, the price isfixed or determinable and collectability is reasonably assured. We may have multiple contracts with the same customer, and each contract is typically treatedas a separate arrangement. When more than one element such as equipment, disposables, and services are contained in a single arrangement, we allocaterevenue between the elements based on each element’s relative selling price, provided that each element meets the criteria for treatment as a separate unit ofaccounting. An item is considered a separate unit of accounting if it has value to the customer on a stand-alone basis. The selling price of the undeliveredelements is determined by the price charged when the element is sold separately, or in cases when the item is not sold separately, by third-party evidence ofselling price or by management's best estimate of selling price. For our software arrangements accounted for under the provisions of ASC 985-605, Software,we establish fair value of undelivered elements based upon vendor specific objective evidence.We generally do not allow our customers to return products. We offer sales rebates and discounts to certain customers. We treat sales rebates and discounts asa reduction of revenue and classify the corresponding liability as current. We estimate rebates for products where there is sufficient historical informationavailable to predict the volume of expected future rebates. If we are unable to estimate the expected rebates reasonably, we record a liability for the maximumpotential rebate or discount that could be earned. In circumstances where we provide upfront rebate payments to customers, we capitalize the rebate paymentsand amortize the resulting asset as a reduction of revenue using a systematic method over the life of the contract.We generally recognize revenue from the sale of perpetual licenses on a percentage-of-completion basis which requires us to make reasonable estimates of theextent of progress toward completion of the contract. These arrangements most often include providing customized implementation services to our customer.We also provide other services, including in some instances hosting, technical support, and maintenance, for the payment of periodic, monthly, or quarterlyfees. We recognize these fees and charges as earned, typically as these services are provided during the contract period.Goodwill and Intangible AssetsGoodwill represents the excess purchase price over the fair value of the net tangible and other identifiable intangible assets acquired. Goodwill is notamortized. Instead goodwill is reviewed for impairment at least annually in accordance with ASC Topic 350, Intangibles - Goodwill and Other ("Topic 350"),or on an interim basis between annual tests when events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is lessthan its carrying value. We perform our annual impairment test on the first day of the fiscal fourth quarter for each of our reporting units.In fiscal 2017, we early adopted ASU No. 2017-04, Intangibles - Goodwill and Other Topics (Topic 350): Simplifying the Test for Goodwill Impairment.Under this amendment, entities perform their goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Animpairment charge is recognized for the amount by which the carrying value exceeds the reporting unit's fair value. A reporting unit is defined as anoperating segment or one level below an operating segment, referred to as a component. We determine our reporting units by first identifying our operatingsegments, and then by assessing whether any components of these segments constitute a business for which discrete financial information is available andwhere segment management regularly reviews the operating results of that component. We aggregate components within an operating segment that havesimilar economic characteristics. Our reporting units for purposes of assessing goodwill impairment are organized primarily based on operating segments andgeography and include: (a) North America Plasma, (b) North America Blood Center, (c) North America Hospital, (d) Europe, Middle East, and Africa(collectively "EMEA"), (e) Asia-Pacific and (f) Japan. In the prior period, North America Blood Center and North America Hospital were components of asingle reporting unit, Americas Blood Center and Hospital. During the fourth quarter of fiscal 2017, we completed certain organizational changes whichresulted in the disaggregation of Americas Blood Center and Hospital into two separate reporting units. The goodwill associated with the legacy AmericasBlood Center and Hospital reporting unit was allocated to the North America Blood Center and North America Hospital reporting units based on theirrelative fair values. The North America Plasma reporting unit is a separate operating segment with dedicated segment management due to the size and scale ofthe Plasma business unit.When allocating goodwill from business combinations to our reporting units, we assign goodwill to the reporting units that we expect to benefit from therespective business combination at the time of acquisition. In addition, for purposes of performing our goodwill impairment tests, assets and liabilities,including corporate assets, which relate to a reporting unit’s operations, and would be considered in determining its fair value, are allocated to the individualreporting units. We allocate assets and liabilities not directly related to a specific reporting unit, but from which the reporting unit benefits, based primarilyon the respective revenue contribution of each reporting unit.In fiscal 2017 and 2016, we used the income approach, specifically the discounted cash flow method, to derive the fair value of each of our reporting units inpreparing our goodwill impairment assessments. This approach calculates fair value by estimating the after-tax cash flows attributable to a reporting unit andthen discounting these after-tax cash flows to a present value using a risk-adjusted discount rate. We selected this method as being the most meaningful inpreparing our goodwill assessments38Table of Contentsbecause the use of the income approach typically generates a more precise measurement of fair value than the market approach. In applying the incomeapproach to our accounting for goodwill, we make assumptions about the amount and timing of future expected cash flows, terminal value growth rates andappropriate discount rates. The amount and timing of future cash flows within our discounted cash flow analysis is based on our most recent operationalbudgets, long range strategic plans and other estimates. The terminal value growth rate is used to calculate the value of cash flows beyond the last projectedperiod in our discounted cash flow analysis and reflects our best estimates for stable, perpetual growth of our reporting units. We use estimates of market-participant risk adjusted weighted average cost of capital as a basis for determining the discount rates to apply to our reporting units’ future expected cashflows. We corroborated the valuations that arose from the discounted cash flow approach by performing both a market multiple valuation and by reconcilingthe aggregate fair value of our reporting units to our market capitalization at the time of the test.During the fourth quarter of fiscal 2017, we performed our annual goodwill impairment test under the guidelines of ASU No. 2017-04. The results of thegoodwill impairment test performed indicated that the estimated fair value of all of our reporting units exceeded their respective carrying values, with theexception of North America Blood Center. For North America Blood Center, we recorded an impairment charge of $57.0 million, which represented the entiregoodwill balance associated with this reporting unit. There were no other reporting units at risk of impairment as of the fiscal 2017 annual test date.During fiscal 2016, we recorded a goodwill impairment charge of $66.3 million associated with the EMEA reporting unit. At the time the impairmentassessment was performed, this represented the entire goodwill balance of this reporting unit. During the first quarter of fiscal 2017, management reorganizedits internal reporting structuring such that certain components of the Americas Blood Center and Hospital operating segment became components of theEMEA operating segment. As a result, we transferred $20.5 million of goodwill to the EMEA operating segment, which represented the portion of thegoodwill associated with these components. Refer to Note 5, Goodwill and Intangible Assets, to our consolidated financial statements contained in Item 8 ofthis Annual Report on Form 10-K for additional details regarding the goodwill impairments recorded.We review intangible assets subject to amortization for impairment at least annually or more frequently if certain conditions arise to determine if any adverseconditions exist that would indicate that the carrying value of an asset or asset group may not be recoverable, or that a change in the remaining useful life isrequired. Conditions indicating that an impairment exists include but are not limited to a change in the competitive landscape, internal decisions to pursuenew or different technology strategies, a loss of a significant customer or a significant change in the marketplace including prices paid for our products or thesize of the market for our products.When an impairment indicator exists, we test the intangible asset for recoverability. For purposes of the recoverability test, we group our amortizableintangible assets with other assets and liabilities at the lowest level of identifiable cash flows if the intangible asset does not generate cash flows independentof other assets and liabilities. If the carrying value of the intangible asset (asset group) exceeds the undiscounted cash flows expected to result from the useand eventual disposition of the intangible asset (asset group), we will write the carrying value down to the fair value in the period identified.We generally calculate fair value of our intangible assets as the present value of estimated future cash flows we expect to generate from the asset using a risk-adjusted discount rate. In determining our estimated future cash flows associated with our intangible assets, we use estimates and assumptions about futurerevenue contributions, cost structures and remaining useful lives of the asset (asset group).If we determine the estimate of an intangible asset's remaining useful life should be reduced based on our expected use of the asset, the remaining carryingamount of the asset is amortized prospectively over the revised estimated useful life.During fiscal 2017, 2016 and 2015, we determined that there were potential impairment indicators for certain intangible assets subject to amortization. Assuch, we performed the recoverability test described above for the relevant asset groups. In fiscal 2017 and 2016, we determined that the undiscounted cashflows did not support the carrying value of certain identified asset groups and made the decision to discontinue the use of and investment in these assets.Accordingly, we recorded impairment charges of $4.8 million and $25.8 million, respectively, in fiscal 2017 and 2016. The impairment charges in fiscal2017 consisted of non-core and underperforming assets while the $25.8 million of impairment charges recorded in fiscal 2016 consisted of $18.7 millionrelated to the write down of the SOLX intangible assets and $7.1 million related to intangible assets that were identified as part of the Company's globalstrategic review. In fiscal 2015, we determined that the expected undiscounted cash flows exceeded the carrying value of the asset groups identified. See Note5, Goodwill and Intangible Assets, to our consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for additionalinformation.39Table of ContentsInventory ProvisionsWe base our provisions for excess, expired and obsolete inventory primarily on our estimates of forecasted net sales. A significant change in the timing orlevel of demand for our products as compared to forecasted amounts may result in recording additional provisions for excess, expired and obsolete inventoryin the future. Additionally, uncertain timing of next-generation product approvals, variability in product launch strategies, product recalls and variation inproduct utilization all affect our estimates related to excess, expired and obsolete inventory.Income TaxesThe income tax provision is calculated for all jurisdictions in which we operate. The income tax provision process involves calculating current taxes due andassessing temporary differences arising from items which are taxable or deductible in different periods for tax and accounting purposes and are recorded asdeferred tax assets and liabilities. Deferred tax assets are evaluated for realizability and a valuation allowance is maintained for the portion of our deferred taxassets that are not more-likely-than-not realizable.We file income tax returns in all jurisdictions in which we operate. We record a liability for uncertain tax positions taken or expected to be taken in incometax returns. Our financial statements reflect expected future tax consequences of such positions presuming the taxing authorities' full knowledge of theposition and all relevant facts. We record a liability for the portion of unrecognized tax benefits claimed which we have determined are not more-likely-than-not realizable. These tax reserves have been established based on management's assessment as to the potential exposure attributable to our uncertain taxpositions as well as interest and penalties attributable to these uncertain tax positions. All tax reserves are analyzed quarterly and adjustments are made asevents occur that result in changes in judgment.We evaluate at the end of each reporting period whether some or all of the undistributed earnings of our foreign subsidiaries are permanently reinvested. Werecognize deferred income tax liabilities to the extent that management asserts that undistributed earnings of its foreign subsidiaries are not permanentlyreinvested or will not be permanently reinvested in the future. Our position is based upon several factors including management’s evaluation of the Companyand its subsidiaries’ financial requirements, the short term and long-term operational and fiscal objectives of the Company, and the tax consequencesassociated with the repatriation of earnings.ContingenciesWe may become involved in various legal proceedings that arise in the ordinary course of business, including, without limitation, patent infringement,product liability and environmental matters. Accruals recorded for various contingencies including legal proceedings, employee related litigation, self-insurance and other claims are based on judgment, the probability of losses and, where applicable, the consideration of opinions of internal and/or externallegal counsel and actuarially determined estimates. When a loss is probable and a range of loss is established but a best estimate cannot be made, we recordthe minimum loss contingency amount. These estimates are often initially developed substantially earlier than the ultimate loss is known, and the estimatesare reevaluated each accounting period, as additional information is available. When we are initially unable to develop a best estimate of loss, we record theminimum amount of loss, which could be zero. As information becomes known, additional loss provision is recorded when either a best estimate can be madeor the minimum loss amount is increased. When events result in an expectation of a more favorable outcome than previously expected, our best estimate ischanged to a lower amount.40Table of ContentsITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKThe Company’s exposures relative to market risk are due to foreign exchange risk and interest rate risk.Foreign Exchange RiskSee 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 oftime, the unforeseen impact on our financial results of fluctuations in foreign exchange rates by using derivative financial instruments known as forwardcontracts to hedge anticipated cash flows from forecasted foreign currency denominated sales and costs. We do not use the financial instruments forspeculative 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 othermajor 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 $3.3 millionincrease in the fair value of the forward contracts, whereas a 10% weakening of the U.S. dollar would result in a $3.2 million decrease in the fair value of theforward contracts.Interest Rate RiskOur exposure to changes in interest rates is associated with borrowings on our Credit Agreement, all of which is variable rate debt. Total outstanding debtunder our Credit Facilities for the fiscal year ended April 1, 2017 was $315.4 million with an interest rate of 2.25% based on prevailing Adjusted LIBORrates. An increase of 100 basis points in Adjusted LIBOR rates would result in additional annual interest expense of $3.2 million. On December 21, 2012, weentered into interest rate swap agreements to effectively convert $250.0 million of borrowings from a variable rate to a fixed rate. The interest rate swapsqualify for hedge accounting treatment as cash flow hedges.41Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and Shareholders of Haemonetics CorporationWe have audited the accompanying consolidated balance sheets of Haemonetics Corporation and subsidiaries as of April 1, 2017 and April 2, 2016, and therelated consolidated statements of (loss) income, comprehensive loss, shareholders' equity and cash flows for each of the three years in the period endedApril 1, 2017. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are theresponsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of HaemoneticsCorporation and subsidiaries at April 1, 2017 and April 2, 2016, and the consolidated results of their operations and their cash flows for each of the threeyears in the period ended April 1, 2017, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financialstatement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information setforth therein.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Haemonetics Corporation’sinternal control over financial reporting as of April 1, 2017, based on criteria established in Internal Control-Integrated Framework issued by the Committeeof Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 24, 2017 expressed an adverse opinion thereon./s/ Ernst & Young LLPBoston, MassachusettsMay 24, 201742Table of ContentsITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAHAEMONETICS CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF (LOSS) INCOME(In thousands, except per share data) Year Ended April 1, 2017 April 2, 2016 March 28, 2015 Net revenues$886,116 $908,832 $910,373Cost of goods sold507,622 502,918 475,955Gross profit378,494 405,914 434,418Operating expenses: Research and development37,556 44,965 54,187Selling, general and administrative301,726 317,223 337,168Impairment of assets58,593 92,395 5,441Contingent consideration income— (4,727) (2,918)Total operating expenses397,875 449,856 393,878Operating (loss) income(19,381) (43,942) 40,540Other expense, net(8,095) (9,474) (9,375)(Loss) income before (benefit) provision for income taxes(27,476) (53,416) 31,165(Benefit) provision for income taxes(1,208) 2,163 14,268Net (loss) income$(26,268) $(55,579) $16,897 Net (loss) income per share - basic$(0.51) $(1.09) $0.33Net (loss) income per share - diluted$(0.51) $(1.09) $0.32 Weighted average shares outstanding Basic51,524 50,910 51,533Diluted51,524 50,910 52,089The accompanying notes are an integral part of these consolidated financial statements.43Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(In thousands) Year Ended April 1, 2017 April 2, 2016 March 28, 2015 Net (loss) income$(26,268) $(55,579) $16,897 Other comprehensive income (loss): Impact of defined benefit plans, net of tax5,220 1,431 (4,331)Foreign currency translation adjustment(7,336) (1,987) (23,710)Unrealized (loss) gain on cash flow hedges, net of tax(364) (3,938) 11,371Reclassifications into earnings of cash flow hedge losses (gains), net of tax4,647 (8,822) (6,464)Other comprehensive income (loss)2,167 (13,316) (23,134)Comprehensive loss$(24,101) $(68,895) $(6,237)The accompanying notes are an integral part of these consolidated financial statements.44Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands, except share data) April 1, 2017 April 2, 2016 ASSETS Current assets: Cash and cash equivalents$139,564 $115,123Accounts receivable, less allowance of $2,184 at April 1, 2017 and $2,253 at April 2, 2016152,683 157,093Inventories, net176,929 187,028Prepaid expenses and other current assets40,853 28,842Total current assets510,029 488,086Property, plant and equipment, net323,862 337,634Intangible assets, less accumulated amortization of $215,772 at April 1, 2017 and $190,816 at April 2, 2016177,540 204,458Goodwill210,841 267,840Deferred tax asset, long term3,988 7,055Other long-term assets12,449 14,055Total assets$1,238,709 $1,319,128LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Notes payable and current maturities of long-term debt$61,022 $43,471Accounts payable42,973 39,674Accrued payroll and related costs43,534 35,798Other current liabilities63,650 66,608Total current liabilities211,179 185,551Long-term debt, net of current maturities253,625 364,529Long-term deferred tax liability12,114 21,377Other long-term liabilities22,181 26,106Stockholders’ equity: Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 52,255,495 shares at April 1,2017 and 50,932,348 shares at April 2, 2016523 509Additional paid-in capital482,044 439,912Retained earnings289,916 316,184Accumulated other comprehensive loss(32,873) (35,040)Total stockholders’ equity739,610 721,565Total liabilities and stockholders’ equity$1,238,709 $1,319,128The accompanying notes are an integral part of these consolidated financial statements.45Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY(In thousands, except share data) Common Stock AdditionalPaid-in Capital Retained Earnings AccumulatedOtherComprehensiveIncome/(Loss) TotalStockholders’ Equity Shares Par Value Balance, March 29, 201452,041 $520 $402,611 $433,347 $1,410 $837,888Employee stock purchase plan183 2 4,761 — — 4,763Exercise of stock options and related tax benefit500 5 14,640 — — 14,645Shares repurchased(1,174) (11) (9,143) (29,879) — (39,033)Issuance of restricted stock, net of cancellations121 1 — — — 1Stock-based compensation expense— — 14,095 — — 14,095Net income— — — 16,897 — 16,897Other comprehensive loss— — — — (23,134) (23,134)Balance, March 28, 201551,671 $517 $426,964 $420,365 $(21,724) $826,122Employee stock purchase plan145 1 4,340 — — 4,341Exercise of stock options492 6 14,026 — — 14,032Shares repurchased(1,488) (15) (12,367) (48,602) — (60,984)Issuance of restricted stock, net of cancellations112 — — — — —Stock-based compensation expense— — 6,949 — — 6,949Net loss— — — (55,579) — (55,579)Other comprehensive loss— — — — (13,316) (13,316)Balance, April 2, 201650,932 $509 $439,912 $316,184 $(35,040) $721,565Employee stock purchase plan141 2 3,557 — — 3,559Exercise of stock options1,048 12 29,425 — — 29,437Issuance of restricted stock, net of cancellations134 — — — — —Stock-based compensation expense— — 9,150 — — 9,150Net loss— — — (26,268) — (26,268)Other comprehensive income— — — — 2,167 2,167Balance, April 1, 201752,255 $523 $482,044 $289,916 $(32,873) $739,610The accompanying notes are an integral part of these consolidated financial statements.46Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Year Ended April 1, 2017 April 2, 2016 March 28, 2015Cash Flows from Operating Activities: Net (loss) income$(26,268) $(55,579) $16,897Adjustments to reconcile net (loss) income to net cash provided by operating activities: Non-cash items: Depreciation and amortization89,733 89,911 86,053Impairment of assets75,348 101,243 5,877Stock-based compensation expense9,150 6,949 14,095Deferred tax (benefit) expense(6,800) (1,038) 4,230Unrealized loss (gain) from hedging activities517 (2,645) 1,558Changes in fair value of contingent consideration— (4,727) (2,918)Provision for losses on accounts receivable and inventory11,381 13,053 4,972Other non-cash operating activities860 899 1,055Change in operating assets and liabilities: Change in accounts receivable3,155 (10,328) 8,446Change in inventories(1,552) 11,896 (21,515)Change in prepaid income taxes1,395 (651) 10,662Change in other assets and other liabilities(18,253) 3,121 (8,013)Tax benefit of exercise of stock options— — 3,786Change in accounts payable and accrued expenses21,072 (30,239) 1,993Net cash provided by operating activities159,738 121,865 127,178Cash Flows from Investing Activities: Capital expenditures(76,135) (102,405) (122,220)Proceeds from sale of property, plant and equipment2,822 637 452Other acquisitions and investments— (3,000) —Net cash used in investing activities(73,313) (104,768) (121,768)Cash Flows from Financing Activities: Payments on long-term real estate mortgage— (943) (1,048)Net (decrease) increase in short-term loans(50,727) 2,272 843Repayment of term loan borrowings(42,683) (21,342) (8,531)Proceeds from employee stock purchase plan3,560 4,341 4,763Proceeds from exercise of stock options29,437 14,032 9,290Share repurchases— (60,984) (39,033)Other financing activities— — 556Net cash used in financing activities(60,413) (62,624) (33,160)Effect of exchange rates on cash and cash equivalents(1,571) (12) (4,057)Net Change in Cash and Cash Equivalents24,441 (45,539) (31,807)Cash and Cash Equivalents at Beginning of Year115,123 160,662 192,469Cash and Cash Equivalents at End of Year$139,564 $115,123 $160,662Supplemental Disclosures of Cash Flow Information: Interest paid$7,850 $8,511 $8,497Income taxes paid$6,957 $7,829 $11,211Transfers from inventory to fixed assets for placement of Haemonetics equipment$6,255 $9,663 $7,458The accompanying notes are an integral part of these consolidated financial statements.47Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATIONHaemonetics is a global healthcare company dedicated to providing a suite of innovative hematology products and solutions to customers, to help themimprove patient care and reduce the cost of healthcare. Our technology addresses important medical markets, including blood and plasma componentcollection, the surgical suite, and hospital transfusion services.Blood and its components (plasma, platelets, and red cells) have many vital - and frequently life-saving - clinical applications. Plasma is used for patientswith major blood loss and is manufactured into biopharmaceuticals to treat a variety of illnesses, including immune diseases and coagulation disorders. Redcells treat trauma patients or patients undergoing surgery with high blood loss, such as open heart surgery or organ transplant. Platelets have many uses inpatient care, including supporting cancer patients undergoing chemotherapy. Blood is essential to a modern healthcare system.Haemonetics develops and markets a wide range of devices and solutions to serve our customers. We provide plasma collection systems and software whichenable plasma fractionators to make life saving pharmaceuticals. We provide analytical devices for measuring hemostasis which enable healthcare providersto better manage their patients’ bleeding risk. Haemonetics makes blood processing systems and software which make blood donation more efficient andtrack life giving blood components. Finally, Haemonetics supplies systems and software which facilitate blood transfusions and cell processing.The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).The accompanying consolidated financial statements present separately our financial position, results of operations, cash flows, and changes in shareholders’equity. All amounts presented, except per share amounts, are stated in thousands of U.S. dollars, unless otherwise indicated. Operating results for fiscal 2017include an overstatement of inventory related charges due to the correction of capitalized manufacturing variances and corrections of certain out of perioditems. Absent these corrections, our operating loss for the fiscal year ended April 1, 2017 would have been $2.4 million lower than the amount included inthe accompanying consolidated statements of (loss) income and comprehensive loss.Operating results for fiscal 2016 include the correction of an overstated liability in fiscal 2014, the correction of capitalized manufacturing variancesidentified during fiscal 2017 and corrections of certain other out of period items, all of which were determined to be immaterial to all periodsimpacted. Absent these corrections, our net loss for the fiscal year ended April 2, 2016 would have been $3.5 million higher than the amount included in theaccompanying consolidated statements of (loss) income and comprehensive loss.We consider events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidencerelative to certain estimates or to identify matters that require additional disclosure. Refer to Note 19, Subsequent Events, for information pertaining to thesale of a product line which occurred after the balance sheet date but prior to the issuance of the financial statements. There were no other material subsequentevents identified.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESFiscal YearOur fiscal year ends on the Saturday closest to the last day of March. Fiscal 2017 and 2015 include 52 weeks with each quarter having 13 weeks. Fiscal 2016includes 53 weeks with each of the first three quarters having 13 weeks and the fourth quarter having 14 weeks.Principles of ConsolidationThe accompanying consolidated financial statements include all accounts including those of our subsidiaries. All significant intercompany accounts andtransactions have been eliminated in consolidation.48Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Use of EstimatesThe preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. Actual results could vary from the amounts derived from our estimates and assumptions. We consider estimates to becritical if we are required to make assumptions about material matters that are uncertain at the time of estimation or if materially different estimates couldhave been made or it is reasonably likely that the accounting estimate will change from period to period. The following are areas considered to be critical andrequire management’s judgment: revenue recognition, allowance for doubtful accounts, inventory provisions, intangible asset and goodwill valuation, legaland other judgmental accruals, and income taxes.ReclassificationsCertain reclassifications have been made to prior years' amounts to conform to the current year's presentation.ContingenciesWe may become involved in various legal proceedings that arise in the ordinary course of business, including, without limitation, patent infringement,product liability and environmental matters. Accruals recorded for various contingencies including legal proceedings, employee related litigation, self-insurance and other claims are based on judgment, the probability of losses and, where applicable, the consideration of opinions of internal and/or externallegal counsel and actuarially determined estimates. When a loss is probable and a range of loss is established but a best estimate cannot be made, we recordthe minimum loss contingency amount, which could be zero. These estimates are often initially developed substantially earlier than the ultimate loss isknown, and the estimates are reevaluated each accounting period, as additional information is available. As information becomes known, an additional lossprovision is recorded when either a best estimate can be made or the minimum loss amount is increased. When events result in an expectation of a morefavorable outcome than previously expected, our best estimate is changed to a lower amount.Revenue RecognitionOur revenue recognition policy is to recognize revenues from product sales, software and services in accordance with ASC Topic 605, Revenue Recognition,and ASC Topic 985-605, Software. These standards require that revenues are recognized when persuasive evidence of an arrangement exists, productdelivery, including customer acceptance, has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonablyassured. We may have multiple contracts with the same customer, and each contract is typically treated as a separate arrangement. When more than oneelement such as equipment, disposables, and services are contained in a single arrangement, we allocate revenue between the elements based on eachelement’s relative selling price, provided that each element meets the criteria for treatment as a separate unit of accounting. An item is considered a separateunit of accounting if it has value to the customer on a stand-alone basis. The selling price of the undelivered elements is determined by the price chargedwhen the element is sold separately, or in cases when the item is not sold separately, by third-party evidence of selling price or by management's best estimateof selling price. For our software arrangements accounted for under the provisions of ASC 985-605, Software, we establish fair value of undelivered elementsbased upon vendor specific objective evidence.We offer sales rebates and discounts to certain customers. We treat sales rebates and discounts as a reduction of revenue and classify the correspondingliability as current. We estimate rebates for products where there is sufficient historical information available to predict the volume of expected future rebates.If we are unable to estimate the expected rebates reasonably, we record a liability for the maximum potential rebate or discount that could be earned. Incircumstances where we provide upfront rebate payments to customers, we capitalize the rebate payments and amortize the resulting asset as a reduction ofrevenue using a systematic method over the life of the contract.Product RevenuesProduct sales consist of the sale of our disposable blood component collection and processing sets and the related equipment. On product sales to endcustomers, revenue is recognized when both the title and risk of loss have transferred to the customer as determined by the shipping terms and all obligationshave been completed. For product sales to distributors, we recognize revenue for both equipment and disposables upon shipment of these products to ourdistributors. Our standard contracts with our distributors state that title to the equipment passes to the distributors at point of shipment to a distributor’slocation. The distributors are responsible for shipment to the end customer along with installation, training and acceptance of the equipment by the endcustomer. Payments from distributors are not contingent upon resale of the product. We also place equipment at customer sites. While we retain ownership ofthis equipment, the customer has the right to use it for a period of time provided they meet certain agreed to conditions. We recover the cost of providing theequipment from the sale of disposables.49Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Software RevenuesWe offer a variety of software solutions to support our plasma, blood collection and hospital customers. We provide information technology platforms andtechnical support for donor recruitment, blood and plasma testing laboratories, and for efficient and compliant operations of blood and plasma collectioncenters. For plasma customers, we also provide information technology platforms for managing distribution of plasma from collection centers to plasmafractionation facilities. For hospitals, we provide solutions to help improve patient safety, reduce cost and ensure compliance.Our software revenues also include revenue from software sales which includes per collection or monthly subscription fees for the license and support of thesoftware as well as hosting services. A significant portion of our software sales are perpetual licenses typically accompanied with significant implementationservice fees related to software customization as well as other professional and technical service fees.We generally recognize revenue from the sale of perpetual licenses on a percentage-of-completion basis which requires us to make reasonable estimates of theextent of progress toward completion of the contract. These arrangements most often include providing customized implementation services to our customer.We also provide other services, including in some instances hosting, technical support, and maintenance, for the payment of periodic, monthly, or quarterlyfees. We recognize these fees and charges as earned, typically as these services are provided during the contract period.Non-Income TaxesWe are required to collect sales or valued added taxes in connection with the sale of certain of our products. We report revenues net of these amounts as theyare promptly remitted to the relevant taxing authority.We are also required to pay a medical device excise tax relating to U.S. sales of Class I, II and III medical devices. This excise tax went into effect January 1,2013, established as part of the March 2010 U.S. healthcare reform legislation, and has been included in selling, general and administrative expenses. InDecember 2015, this tax was suspended for two years, beginning on January 1, 2016. This tax may be imposed again beginning on January 1, 2018, unlessthe suspension is extended or the medical device excise tax is permanently repealed.Translation of Foreign CurrenciesAll assets and liabilities of foreign subsidiaries are translated at the rate of exchange at year-end while sales and expenses are translated at an average rate ineffect during the year. The net effect of these translation adjustments is shown in the accompanying financial statements as a component of stockholders'equity. Foreign currency transaction gains and losses, including those resulting from intercompany transactions, are charged directly to earnings andincluded in other expense, net on the consolidated statements of (loss) income. The impact of foreign exchange on long-term intercompany loans, for whichrepayment has not been scheduled or planned, are recorded in accumulated other comprehensive loss on the consolidated balance sheet.Cash and Cash EquivalentsCash equivalents include various instruments such as money market funds, U.S. government obligations and commercial paper with maturities of threemonths or less at date of acquisition. Cash and cash equivalents are recorded at cost, which approximates fair market value. As of April 1, 2017, our cash andcash equivalents consisted of investments in United States Government Agency and institutional money market funds.Allowance for Doubtful AccountsWe establish a specific allowance for customers when it is probable that they will not be able to meet their financial obligation. Customer accounts arereviewed individually on a regular basis and appropriate reserves are established as deemed appropriate. We also maintain a general reserve using apercentage that is established based upon the age of our receivables and our collection history. We establish allowances for balances not yet due and past dueaccounts based on past experience.50Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)InventoriesInventories are stated at the lower of cost or market and include the cost of material, labor and manufacturing overhead. Cost is determined with the first-in,first-out method. We have based our provisions for excess, expired and obsolete inventory primarily on our estimates of forecasted net sales. Significantchanges in the timing or level of demand for our products results in recording additional provisions for excess, expired and obsolete inventory. Additionally,uncertain timing of next-generation product approvals, variability in product launch strategies, non-cancelable purchase commitments, product recalls andvariation in product utilization all affect our estimates related to excess, expired and obsolete inventory.Property, Plant and EquipmentProperty, plant and equipment is recorded at historical cost. We provide for depreciation and amortization by charges to operations using the straight-linemethod in amounts estimated to recover the cost of the building and improvements, equipment, and furniture and fixtures over their estimated useful lives asfollows:Asset Classification EstimatedUseful LivesBuilding 30-40 YearsBuilding improvements 5-20 YearsPlant equipment and machinery 3-15 YearsOffice equipment and information technology 2-10 YearsHaemonetics equipment 3-7 YearsWe evaluate the depreciation periods of property, plant and equipment to determine whether events or circumstances warrant revised estimates of useful lives.All property, plant and equipment are also tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not berecoverable.Our installed base of devices includes devices owned by us and devices sold to the customer. The asset on our balance sheet classified as Haemoneticsequipment consists of medical devices installed at customer sites but owned by Haemonetics. Generally the customer has the right to use it for a period oftime as long as they meet the conditions we have established, which among other things, generally include one or more of the following:•Purchase and consumption of a certain level of disposable products•Payment of monthly rental fees•An asset utilization performance metric, such as performing a minimum level of procedures per month per deviceConsistent with the impairment tests noted below for other intangible assets subject to amortization, we review Haemonetics equipment and their relateduseful lives at least once a year, or more frequently if certain conditions arise, to determine if any adverse conditions exist that would indicate the carryingvalue of these assets may not be recoverable. To conduct these reviews we estimate the future amount and timing of demand for disposables used with thesedevices, from which we generate revenues. We also consider product life cycle in our evaluation of useful life and recoverability. Changes in expecteddemand can result in additional depreciation expense, which is classified as cost of goods sold. Any significant unanticipated changes in demand couldimpact the value of our devices and our reported operating results.Leasehold improvements are depreciated over the lesser of their useful lives or the term of the lease. Maintenance and repairs are generally expensed tooperations as incurred. When the repair or maintenance costs significantly extend the life of the asset, these costs may be capitalized. When equipment andimprovements are sold or otherwise disposed of, the asset cost and accumulated depreciation are removed from the accounts, and the resulting gain or loss, ifany, is included in the consolidated statements of (loss) income.Goodwill and Intangible AssetsGoodwill represents the excess purchase price over the fair value of the net tangible and other identifiable intangible assets acquired. Goodwill is notamortized. Instead goodwill is reviewed for impairment at least annually in accordance with ASC Topic 350, Intangibles - Goodwill and Other ("Topic 350"),or on an interim basis between annual tests when events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is lessthan its carrying value. We perform our annual impairment test on the first day of the fiscal fourth quarter for each of our reporting units.51Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)In fiscal 2017, we early adopted ASU No. 2017-04, Intangibles - Goodwill and Other Topics (Topic 350): Simplifying the Test for Goodwill Impairment.Under this amendment, entities perform their goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Animpairment charge is recognized for the amount by which the carrying value exceeds the reporting unit's fair value. A reporting unit is defined as anoperating segment or one level below an operating segment, referred to as a component. We determine our reporting units by first identifying our operatingsegments, and then by assessing whether any components of these segments constitute a business for which discrete financial information is available andwhere segment management regularly reviews the operating results of that component. We aggregate components within an operating segment that havesimilar economic characteristics. Our reporting units for purposes of assessing goodwill impairment are organized primarily based on operating segments andgeography and include: (a) North America Plasma, (b) North America Blood Center, (c) North America Hospital, (d) Europe, Middle East, and Africa(collectively "EMEA"), (e) Asia-Pacific and (f) Japan. In the prior period, North America Blood Center and North America Hospital were components of asingle reporting unit, Americas Blood Center and Hospital. During the fourth quarter of fiscal 2017, we completed certain organizational changes whichresulted in the disaggregation of Americas Blood Center and Hospital into two separate reporting units. The goodwill associated with the legacy AmericasBlood Center and Hospital reporting unit was allocated to the North America Blood Center and North America Hospital reporting units based on theirrelative fair values. The North America Plasma reporting unit is a separate operating segment with dedicated segment management due to the size and scale ofthe Plasma business unit.When allocating goodwill from business combinations to our reporting units, we assign goodwill to the reporting units that we expect to benefit from therespective business combination at the time of acquisition. In addition, for purposes of performing our goodwill impairment tests, assets and liabilities,including corporate assets, which relate to a reporting unit’s operations, and would be considered in determining its fair value, are allocated to the individualreporting units. We allocate assets and liabilities not directly related to a specific reporting unit, but from which the reporting unit benefits, based primarilyon the respective revenue contribution of each reporting unit.In fiscal 2017 and 2016, we used the income approach, specifically the discounted cash flow method, to derive the fair value of each of our reporting units inpreparing our goodwill impairment assessments. This approach calculates fair value by estimating the after-tax cash flows attributable to a reporting unit andthen discounting these after-tax cash flows to a present value using a risk-adjusted discount rate. We selected this method as being the most meaningful inpreparing our goodwill assessments because the use of the income approach typically generates a more precise measurement of fair value than the marketapproach. In applying the income approach to our accounting for goodwill, we make assumptions about the amount and timing of future expected cash flows,terminal value growth rates and appropriate discount rates. The amount and timing of future cash flows within our discounted cash flow analysis is based onour most recent operational budgets, long range strategic plans and other estimates. The terminal value growth rate is used to calculate the value of cash flowsbeyond the last projected period in our discounted cash flow analysis and reflects our best estimates for stable, perpetual growth of our reporting units. Weuse estimates of market-participant risk adjusted weighted average cost of capital as a basis for determining the discount rates to apply to our reporting units’future expected cash flows. We corroborated the valuations that arose from the discounted cash flow approach by performing both a market multiplevaluation and by reconciling the aggregate fair value of our reporting units to our market capitalization at the time of the test.During the fourth quarter of fiscal 2017, we performed our annual goodwill impairment test under the guidelines of ASU No. 2017-04. The results of thegoodwill impairment test performed indicated that the estimated fair value of all of our reporting units exceeded their respective carrying values, with theexception of North America Blood Center, for which we recorded an impairment charge of $57.0 million, which represented the entire goodwill balanceassociated with this reporting unit. There were no other reporting units at risk of impairment as of the fiscal 2017 annual test date.During fiscal 2016, we recorded a goodwill impairment charge of $66.3 million associated with the EMEA reporting unit. At the time the impairmentassessment was performed, this represented the entire goodwill balance of this reporting unit. During the first quarter of fiscal 2017, management reorganizedits operating segments such that certain components of the All Other operating segment became components of the EMEA operating segment. As a result, wetransferred $20.5 million of goodwill to the EMEA operating segment, which represented the portion of the goodwill associated with these components.Refer to Note 5, Goodwill and Intangible Assets, for additional details regarding the goodwill impairments recorded.We review intangible assets subject to amortization for impairment at least annually or more frequently if certain conditions arise to determine if any adverseconditions exist that would indicate that the carrying value of an asset or asset group may not be recoverable, or that a change in the remaining useful life isrequired. Conditions indicating that an impairment exists include but are not limited to a change in the competitive landscape, internal decisions to pursuenew or different technology strategies,52Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)a loss of a significant customer or a significant change in the marketplace including prices paid for our products or the size of the market for our products.When an impairment indicator exists, we test the intangible asset for recoverability. For purposes of the recoverability test, we group our amortizableintangible assets with other assets and liabilities at the lowest level of identifiable cash flows if the intangible asset does not generate cash flows independentof other assets and liabilities. If the carrying value of the intangible asset (asset group) exceeds the undiscounted cash flows expected to result from the useand eventual disposition of the intangible asset (asset group), we will write the carrying value down to the fair value in the period identified.We generally calculate fair value of our intangible assets as the present value of estimated future cash flows we expect to generate from the asset using a risk-adjusted discount rate. In determining our estimated future cash flows associated with our intangible assets, we use estimates and assumptions about futurerevenue contributions, cost structures and remaining useful lives of the asset (asset group).If we determine the estimate of an intangible asset's remaining useful life should be reduced based on our expected use of the asset, the remaining carryingamount of the asset is amortized prospectively over the revised estimated useful life.During fiscal 2017, 2016 and 2015, we determined that there were potential impairment indicators for certain intangible assets subject to amortization. Assuch, we performed the recoverability test described above for the relevant asset groups. In fiscal 2017 and 2016, we determined that the undiscounted cashflows did not support the carrying value of certain identified asset groups and made the decision to discontinue the use of and investment in these assets.Accordingly, we recorded impairment charges of $4.8 million and $25.8 million, respectively, in fiscal 2017 and 2016. The impairment charges in fiscal2017 consisted of non-core and underperforming assets while the $25.8 million of impairment charges recorded in fiscal 2016 consisted of $18.7 millionrelated to the write down of the SOLX intangible assets and $7.1 million related to intangible assets that were identified as part of the Company's globalstrategic review. In fiscal 2015, we determined that the expected undiscounted cash flows exceeded the carrying value of the asset groups identified. See Note5, Goodwill and Intangible Assets, to our consolidated financial statements contained in Item 8 for additional information.Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise MarketedASC Topic 985-20, Software, specifies that costs incurred internally in researching and developing a computer software product should be charged toexpense until technological feasibility has been established for the product. Once technological feasibility is established, all software costs should becapitalized until the product is available for general release to customers, at which point capitalized costs are amortized over their estimated useful life of fiveto 10 years. Technological feasibility is established when we have a detailed design of the software and when research and development activities on theunderlying device, if applicable, are completed. We capitalize costs associated with both software that we sell as a separate product and software that isembedded in a device.We review the net realizable value of capitalized assets periodically to assess the recoverability of amounts capitalized. During fiscal 2017 and fiscal 2016,we recorded $4.0 million and $6.0 million, respectively, of impairment charges related to the discontinuance of certain capitalized software projects. In thefuture, the net realizable value may be adversely affected by the loss of a significant customer or a significant change in the market place, which could resultin an impairment being recorded.Other Current LiabilitiesOther current liabilities represent items payable or expected to settle within the next twelve months. The items included in the fiscal year end balances were:(In thousands)April 1, 2017 April 2, 2016VAT liabilities$4,051 $1,289Forward contracts966 4,210Deferred revenue26,485 27,053Accrued taxes4,407 3,876All other27,741 30,180Total$63,650 $66,60853Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Other Long-Term LiabilitiesOther long-term liabilities represent items that are not payable or expected to settle within the next twelve months. The items included in the fiscal year endbalances were:(In thousands)April 1, 2017 April 2, 2016Unfunded pension liability14,060 18,067Unrecognized tax benefit1,627 2,283All other6,494 5,756Total$22,181 $26,106Research and Development ExpensesAll research and development costs are expensed as incurred.Advertising CostsAll advertising costs are expensed as incurred and are included in selling, general and administrative expenses in the consolidated statements of (loss)income. Advertising expenses were $2.5 million, $3.9 million, and $4.5 million in fiscal 2017, 2016 and 2015, respectively.Shipping and Handling CostsShipping and handling costs are included in selling, general and administrative expenses. Freight is classified in cost of goods sold when the customer ischarged for freight and in selling, general and administration when the customer is not explicitly charged for freight.Income TaxesThe income tax provision is calculated for all jurisdictions in which we operate. The income tax provision process involves calculating current taxes due andassessing temporary differences arising from items which are taxable or deductible in different periods for tax and accounting purposes and are recorded asdeferred tax assets and liabilities. Deferred tax assets are evaluated for realizability and a valuation allowance is maintained for the portion of our deferred taxassets that are not more-likely-than-not realizable. All available evidence, both positive and negative, has been considered to determine whether, based onthe weight of that evidence, a valuation allowance is needed against the deferred tax assets. Significant weight has been given to our consolidated worldwidecumulative loss position for the current and prior two years.We file income tax returns in all jurisdictions in which we operate. We record a liability for uncertain tax positions taken or expected to be taken in incometax returns. Our financial statements reflect expected future tax consequences of such positions presuming the taxing authorities' full knowledge of theposition and all relevant facts. We record a liability for the portion of unrecognized tax benefits claimed which we have determined are not more-likely-than-not realizable. These tax reserves have been established based on management's assessment as to the potential exposure attributable to our uncertain taxpositions as well as interest and penalties attributable to these uncertain tax positions. All tax reserves are analyzed quarterly and adjustments are made asevents occur that result in changes in judgment.We evaluate at the end of each reporting period whether some or all of the undistributed earnings of our foreign subsidiaries are permanently reinvested. Werecognize deferred income tax liabilities to the extent that management asserts that undistributed earnings of its foreign subsidiaries are not permanentlyreinvested or will not be permanently reinvested in the future. Our position is based upon several factors including management’s evaluation of the Companyand its subsidiaries’ financial requirements, the short term and long-term operational and fiscal objectives of the Company, and the tax consequencesassociated with the repatriation of earnings.Derivative InstrumentsWe account for our derivative financial instruments in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”) and ASC Topic 820, FairValue Measurements and Disclosures (“ASC 820”). In accordance with ASC 815, we record all derivatives on the balance sheet at fair value. The accountingfor the change in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative as a hedginginstrument for accounting purposes, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. In addition, ASC815 provides that, for derivative instruments that qualify for hedge accounting, changes in the fair value are either (a) offset54Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or (b) recognized in equity until the hedged item isrecognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows. The ineffective portion of aderivative’s change in fair value is immediately recognized in earnings. We do not use derivative financial instruments for trading or speculation purposes.When the underlying hedged transaction affects earnings, the gains or losses on the forward foreign exchange rate contracts designated as hedges arerecorded in net revenues, cost of goods sold, operating expenses and other expense, net in our consolidated statements of (loss) income, depending on thenature of the underlying hedged transactions. The cash flows related to the gains and losses are classified in the consolidated statements of cash flows as partof cash flows from operating activities. For those derivative instruments that are not designated as part of a hedging relationship we record the gains or lossesin earnings currently. These gains and losses are intended to offset the gains and losses recorded on net monetary assets or liabilities that are denominated inforeign currencies. We recorded foreign currency losses of $1.8 million, $1.4 million, and $1.1 million in fiscal 2017, 2016 and 2015, respectively.On a quarterly basis, we assess whether the cash flow hedges are highly effective in offsetting changes in the cash flow of the hedged item. We manage thecredit risk of the counterparties by dealing only with institutions that we consider financially sound and consider the risk of non-performance to be remote.Our derivative instruments do not subject our earnings or cash flows to material risk, as gains and losses on these derivatives are intended to offset losses andgains on the item being hedged. We do not enter into derivative transactions for speculative purposes and we do not have any non-derivative instrumentsthat are designated as hedging instruments pursuant to ASC Topic 815.Stock-Based CompensationWe expense the fair value of stock-based awards granted to employees, board members and others, net of estimated forfeitures. To calculate the grant-date fairvalue of our stock options we use the Black-Scholes option-pricing model and for performance share units and market stock units we use Monte Carlosimulation models.Valuation of AcquisitionsWe allocate the amounts we pay for each acquisition to the assets acquired and liabilities assumed based on their estimated fair values at the dates ofacquisition, including acquired identifiable intangible assets. We base the estimated fair value of identifiable intangible assets on detailed valuations thatuse historical information and market assumptions based upon the assumptions of a market participant. We allocate any excess purchase price over the fairvalue of the net tangible and intangible assets acquired to goodwill.Concentration of Credit Risk and Significant CustomersFinancial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents and accounts receivable. Infiscal 2017 and 2016, one one plasma collection customer accounted for 14% and 11% of our net revenues, respectively. In fiscal 2015 no customeraccounted for more than 10% of our net revenues.Certain other markets and industries can expose us to concentrations of credit risk. For example, in our Plasma business unit, our sales are concentrated withseveral large customers. As a result, our accounts receivable extended to any one of these biopharmaceutical customers can be significant at any point intime. Also, a portion of our trade accounts receivable outside the United States include sales to government-owned or supported healthcare systems in severalcountries, which are subject to payment delays. Payment is dependent upon the financial stability and creditworthiness of those countries’ nationaleconomies. We have not incurred significant losses on government receivables. We continually evaluate all government receivables for potential collectionrisks associated with the availability of government funding and reimbursement practices. If the financial condition of customers or the countries’ healthcaresystems deteriorate such that their ability to make payments is uncertain, allowances may be required in future periods.Recent Accounting PronouncementsStandards ImplementedIn June 2014, the FASB issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Termsof an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. ASU No. 2014-12 requires that a performance targetthat affects vesting and could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existingguidance in ASC 718, Compensation—Stock Compensation, as it relates to such awards. We adopted ASU No. 2014-12 in our first quarter of fiscal55Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)2017 using the prospective method. The adoption of ASU No. 2014-12 did not have a material effect on our financial position or results of operations.In August 2015, the FASB issued ASU No. 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans(Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures,(Part III) Measurement Date Practical Expedient. Part I of ASU No. 2015-12 designates contract value as the only required measure for fully benefit-responsive investment contracts. Part II simplifies the investment disclosure requirements under Topics 820, 960, 962, and 965 for employee benefits plansand Part III provides a measurement date practical expedient for fiscal periods that do not coincide with a month-end date. ASU No. 2015-12 was effective forfiscal years beginning after December 15, 2015 with early adoption permitted. The adoption of ASU No. 2015-12 did not have a material effect on ourfinancial position or results of operations.In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertaintiesabout an Entity’s Ability to Continue as a Going Concern. ASU No. 2014-15 defines management's responsibility to assess an entity's ability to continue as agoing concern, and to provide related footnote disclosures in certain circumstances. This guidance is effective for all entities in the first annual period endingafter December 15, 2016; however, early adoption is permitted. We adopted ASU No. 2014-15 in the fourth quarter of fiscal 2017. The adoption of ASU No.2014-15 did not have a material impact our financial position or results of operations since there was no uncertainty about our ability to continue as a goingconcern.In January 2017, the FASB issued ASC Update No. 2017-04, Intangibles - Goodwill and Other Topics (Topic 350): Simplifying the Test for GoodwillImpairment. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those periods. Early adoption ispermitted for interim or annual goodwill impairment tests performed on testing dates on or after January 1, 2017. The purpose of Update No. 2017-04 is toreduce the cost and complexity of evaluating goodwill for impairment. It eliminates the need for entities to calculate the impaired fair value of goodwill byassigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Under thisamendment, an entity will perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairmentcharge is recognized for the amount by which the carrying value exceeds the reporting unit's fair value. We early adopted ASU No. 2017-04 in fiscal 2017 ona prospective basis.3. PRODUCT WARRANTIESWe generally provide a warranty on parts and labor for one year after the sale and installation of each device. We also warrant our disposables productsthrough their use or expiration. We estimate our potential warranty expense based on our historical warranty experience, and we periodically assess theadequacy of our warranty accrual and make adjustments as necessary.(In thousands)April 1, 2017 April 2, 2016Warranty accrual as of the beginning of the year$420 $531Warranty provision400 948Warranty spending(644) (1,059)Warranty accrual as of the end of the year$176 $4204. INVENTORIESInventories are stated at the lower of cost or market and include the cost of material, labor and manufacturing overhead. Cost is determined with the first-in,first-out method.(In thousands)April 1, 2017 April 2, 2016Raw materials$52,052 $62,062Work-in-process10,400 13,180Finished goods114,477 111,786Total Inventories$176,929 $187,028Inventories include specific charges and reserves of $11.0 million and $9.4 million for fiscal 2017 and fiscal 2016, respectively, primarily related to changesin demand for Blood Center products and the impact of the whole blood product recall in fiscal 2017.56Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)5. GOODWILL AND INTANGIBLE ASSETSGoodwill Impairment Testing and ChargesUnder ASC Topic 350, Intangibles - Goodwill and Other, goodwill and intangible assets determined to have indefinite useful lives are not amortized. Insteadthese assets are evaluated for impairment at least annually, or on an interim basis between annual tests when events or circumstances indicate that it is morelikely than not that the fair value of a reporting unit is less than its carrying value. We perform our annual impairment test on the first day of the fiscal fourthquarter for each of our reporting units. Our reporting units for purposes of assessing goodwill impairment are organized primarily based on operatingsegments and geography and include: (a) North America Plasma, (b) North America Blood Center, (c) North America Hospital, (d) EMEA, (e) Asia-Pacific and(f) Japan. In the prior period, North America Blood Center and North America Hospital were components of a single reporting unit, Americas Blood Centerand Hospital. During the fourth quarter of fiscal 2017, we completed certain organizational changes which resulted in the disaggregation of Americas BloodCenter and Hospital into two separate reporting units. The goodwill associated with the legacy Americas Blood Center and Hospital reporting unit wasallocated to the North America Blood Center and North America Hospital reporting units based on their relative fair values. The North America Plasmareporting unit is a separate operating segment with dedicated segment management due the size and scale of the Plasma business unit.In fiscal 2017, we early adopted ASU No. 2017-04, Intangibles - Goodwill and Other Topics (Topic 350): Simplifying the Test for Goodwill Impairment.Under this amendment, entities perform their goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Animpairment charge is recognized for the amount by which the carrying value exceeds the reporting unit's fair value. We utilized a discounted cash flowapproach in order to value our reporting units for the test, which required that we forecast future cash flows of the reporting units and discount the cash flowstream based upon a weighted average cost of capital that was derived, in part, from comparable companies within similar industries. The discounted cashflow calculations also included a terminal value calculation that was based upon an expected long-term growth rate for the applicable reporting unit. Webelieve that our procedures for estimating discounted future cash flows, including the terminal valuation, were reasonable and consistent with marketconditions at the time of estimation. We corroborated the valuations that arose from the discounted cash flow approach by performing both a market multiplevaluation and by reconciling the aggregate fair value of our reporting units to our market capitalization at the time of the test.The results of the goodwill impairment test performed in the fourth quarter of fiscal 2017 indicated that the estimated fair value of all of our reporting unitsexceeded their respective carrying values, with the exception of North America Blood Center. For North America Blood Center we recorded an impairmentcharge of $57.0 million, which represented the entire goodwill balance associated with this reporting unit. There were no other reporting units at risk ofimpairment as of the fiscal 2017 annual test date.During fiscal 2016, we recorded a goodwill impairment charge of $66.3 million associated with the EMEA reporting unit. At the time the impairmentassessment was performed, this represented the entire goodwill balance of this reporting unit. During the first quarter of fiscal 2017, management reorganizedits operating segments such that certain components of the Americas Blood Center and Hospital operating segment became components of the EMEAoperating segment. As a result, we transferred $20.5 million of goodwill to the EMEA operating segment, which represented the portion of the goodwillassociated with these components.The changes in the carrying amount of goodwill by operating segment for fiscal 2017 and 2016 are as follows:(In thousands)Japan EMEA North AmericaPlasma All Other TotalCarrying amount as of March 28, 2015$24,899 $72,695 $26,415 $210,301 $334,310Impairment charge— (66,305) — — (66,305)Transfer of goodwill between segments— (6,390) — 6,390 —Currency translation(16) — — (149) (165)Carrying amount as of April 2, 2016$24,883 $— $26,415 $216,542 $267,840Impairment charge— — — (56,989) (56,989)Transfer of goodwill between segments— 20,545 — (20,545) —Currency translation(3) (2) — (5) (10)Carrying amount as of April 1, 2017$24,880 $20,543 $26,415 $139,003 $210,84157Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Intangible Asset ImpairmentDuring fiscal 2017, we impaired $4.8 million of intangible assets as a result of our review of non-core and underperforming assets and our decision todiscontinue the use of and investment in certain assets, of which $4.0 million was included within cost of goods sold and $0.8 million was included withinimpairment of assets on the consolidated statements of (loss) income. These impairments impacted our All Other reportable segment.During fiscal 2016, we recorded intangible asset impairment charges of $25.8 million, of which $6.6 million was included within cost of goods sold, whilethe remaining $19.2 million was included within impairment of assets on the consolidated statements of (loss) income. Of these intangible impairments, $6.6million related to EMEA and the remaining $19.2 million related to our All Other reportable segment. These impairment charges primarily related to theSOLX technology acquired from Hemerus Medical, LLC, which resulted in impairment charges of $18.7 million and included the reversal of the $4.9 millionof contingent consideration associated with the acquisition. The remaining $7.1 million of impairment charges recorded in fiscal 2016 was due to changes inthe strategic direction of the Company.The gross carrying amount of intangible assets and the related accumulated amortization as of April 1, 2017 and April 2, 2016 is as follows:(In thousands)Gross CarryingAmount AccumulatedAmortization(1) NetAs of April 1, 2017 Amortizable: Patents$9,183 $8,043 $1,140Capitalized software49,948 21,563 28,385Other developed technology117,712 72,594 45,118Customer contracts and related relationships194,876 108,073 86,803Trade names7,017 5,499 1,518Total$378,736 $215,772 $162,964Non-amortizable: In-process software development$12,743 In-process patents1,833 Total$14,576 (In thousands)Gross CarryingAmount AccumulatedAmortization(1) NetAs of April 2, 2016 Amortizable: Patents$8,545 $7,542 $1,003Capitalized software40,488 14,791 25,697Other developed technology126,142 73,475 52,667Customer contracts and related relationships196,085 89,804 106,281Trade names7,083 5,204 1,879Total$378,343 $190,816 $187,527Non-amortizable: In-process software development$14,427 In-process patents2,504 Total$16,931 (1)Includes impairment of SOLX and other intangible assets, as discussed above.Intangible assets include the value assigned to license rights and other developed technology, patents, customer contracts and relationships and trade names.The estimated useful lives for all of these intangible assets are 2 to 19 years. The changes to the net carrying value of our intangible assets from April 2, 2016to April 1, 2017 reflect the impact of amortization expense and impairments of intangible assets, partially offset by the investment in capitalized software.58Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Aggregate amortization expense for amortized intangible assets for fiscal 2017 and 2016 was $37.2 million and $59.3 million, respectively, which included$4.0 million and $25.4 million, respectively, of amortization expense as a result of the intangible asset impairments discussed above. Fiscal 2015amortization expense was $33.5 million. Future annual amortization expense on intangible assets is estimated to be as follows:(In thousands) Fiscal 2018 $31,495Fiscal 2019 $30,089Fiscal 2020 $28,091Fiscal 2021 $26,190Fiscal 2022 $25,4856. DERIVATIVES AND FAIR VALUE MEASUREMENTSWe manufacture, market and sell our products globally. For the fiscal year ended April 1, 2017, 41.0% of our sales were generated outside the U.S. in localcurrencies. We also incur certain manufacturing, marketing and selling costs in international markets in local currency.Accordingly, our earnings and cash flows are exposed to market risk from changes in foreign currency exchange rates relative to the U.S. Dollar, our reportingcurrency. We have a program in place that is designed to mitigate our exposure to changes in foreign currency exchange rates. That program includes the useof derivative financial instruments to minimize for a period of time, the impact on our financial results from changes in foreign exchange rates. We utilizeforeign currency forward contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, primarily the Japanese Yen andthe 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 volatilityof foreign exchange rates, but because we generally enter into forward contracts one year out, rates are fixed for a one-year period, thereby facilitatingfinancial planning and resource allocation.Designated Foreign Currency Hedge ContractsAll of our designated foreign currency hedge contracts as of April 1, 2017 and April 2, 2016 were cash flow hedges under ASC Topic 815, Derivatives andHedging. We record the effective portion of any change in the fair value of designated foreign currency hedge contracts in other comprehensive income (loss)until the related third-party transaction occurs. Once the related third-party transaction occurs, we reclassify the effective portion of any related gain or losson the designated foreign currency hedge contracts to earnings. In the event the hedged forecasted transaction does not occur, or it becomes probable that itwill not occur, we would reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. We had designated foreign currencyhedge contracts outstanding in the contract amount of $68.4 million as of April 1, 2017 and $107.4 million as of April 2, 2016.During fiscal 2017, we recognized net losses of $4.6 million in earnings on our cash flow hedges, compared to recognized net gains of $8.8 million and $6.5million during fiscal 2016 and 2015, respectively. For the fiscal year ended April 1, 2017, a $0.5 million loss, net of tax, was recorded in accumulated othercomprehensive loss to recognize the effective portion of the fair value of any designated foreign currency hedge contracts that are, or previously were,designated as foreign currency cash flow hedges, as compared to a loss of $3.9 million, net of tax, for the fiscal year ended April 2, 2016 and a gain of $12.2million, net of tax, for the fiscal year ended March 28, 2015. At April 1, 2017, losses of $0.5 million, net of tax, will be reclassified to earnings within the nexttwelve months. All currency cash flow hedges outstanding as of April 1, 2017 mature within twelve months.Non-Designated Foreign Currency ContractsWe manage our exposure to changes in foreign currency on a consolidated basis to take advantage of offsetting transactions and balances. We use foreigncurrency forward contracts as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These foreigncurrency forward contracts are entered into for periods consistent with currency transaction exposures, generally one month. They are not designated as cashflow or fair value hedges under ASC Topic 815. These forward contracts are marked-to-market with changes in fair value recorded to earnings. We had non-designated foreign currency hedge contracts under ASC Topic 815 outstanding in the contract amount of $55.4 million as of April 1, 2017 and $48.8 millionas of April 2, 2016.59Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Interest Rate SwapsOn December 21, 2012, we entered into two interest rate swap agreements (the "Swaps") on a total notional value of $250.0 million of debt. The Swaps areamortizing and mature on August 1, 2017. We designated the Swaps as cash flow hedges of variable interest rate risk associated with $250.0 million ofindebtedness. As of April 1, 2017, the notional amount of these Swaps was $50.0 million. For fiscal 2017, 2016 and 2015, we recorded nominal activity inaccumulated other comprehensive loss to recognize the effective portion of the fair value of the Swaps that qualify as cash flow hedges.Fair Value of Derivative InstrumentsThe following table presents the effect of our derivative instruments designated as cash flow hedges and those not designated as hedging instruments underASC Topic 815 in our consolidated statements of loss and comprehensive loss for the fiscal year ended April 1, 2017.Derivative Instruments Amount of Gain(Loss) Recognized inAccumulated OtherComprehensive Loss Amount of GainReclassified fromAccumulated OtherComprehensive Lossinto Earnings Location inConsolidated Statementsof (Loss) Income andComprehensive Loss Amount of GainExcluded fromEffectivenessTesting (*) Location inConsolidatedStatements of(Loss) Income andComprehensiveLoss(In thousands) Designated foreign currency hedge contracts,net of tax $(524) $(4,647) Net revenues, COGS,and SG&A $636 Other expense,netNon-designated foreign currency hedgecontracts — — $221 Other expense,netDesignated interest rate swaps, net of tax $160 Other expense, net $— (*) We exclude the difference between the spot rate and hedge forward rate from our effectiveness testing.We did not have fair value hedges or net investment hedges outstanding as of April 1, 2017 or April 2, 2016. As of April 1, 2017, we have not recognized anydeferred tax assets or deferred tax liabilities for designated foreign currency hedges.ASC Topic 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fairvalue of our derivative instruments using the framework prescribed by ASC Topic 820, Fair Value Measurements and Disclosures, by considering theestimated amount we would receive or pay to sell or transfer these instruments at the reporting date and by taking into account current interest rates, currencyexchange rates, current interest rate curves, interest rate volatilities, the creditworthiness of the counterparty for assets, and our creditworthiness for liabilities.In certain instances, we may utilize financial models to measure fair value. Generally, we use inputs that include quoted prices for similar assets or liabilitiesin 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; andinputs derived principally from, or corroborated by, observable market data by correlation or other means. As of April 1, 2017, we have classified ourderivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by ASC Topic 815, as discussed below, because these observable inputsare available for substantially the full term of our derivative instruments.60Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The following tables present the fair value of our derivative instruments as they appear in our consolidated balance sheets:(In thousands)Location inBalance Sheet April 1, 2017 April 2, 2016Derivative Assets: Designated foreign currency hedge contractsOther current assets $1,645 $335Non-designated foreign currency hedge contractsOther current assets 218 92Designated interest rate swapsOther current assets 64 — $1,927 $427Derivative Liabilities: Designated foreign currency hedge contractsOther current liabilities $894 $3,910Non-designated foreign currency hedge contractsOther current liabilities $72 $146Designated interest rate swapsOther current liabilities — 154 $966 $4,210Other Fair Value MeasurementsASC Topic 820 defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP, and expands disclosures about fair valuemeasurements. ASC Topic 820 does not require any new fair value measurements; rather, it applies to other accounting pronouncements that require or permitfair value measurements. In accordance with ASC Topic 820, for the fiscal years ended April 1, 2017 and April 2, 2016, we applied the requirements underASC Topic 820 to our non-financial assets and non-financial liabilities.On a recurring basis, we measure certain financial assets and financial liabilities at fair value, including our money market funds, foreign currency hedgecontracts, and contingent consideration. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability inan orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determinedbased on assumptions that market participants would use in pricing an asset or liability. We base fair value upon quoted market prices, where available.Where quoted market prices or other observable inputs are not available, we apply valuation techniques to estimate fair value.ASC Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The categorization of assets and liabilities within thevaluation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined asfollows:•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 andmarket-corroborated inputs.•Level 3 — Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants woulduse in pricing the asset or liability at the measurement date, including assumptions about risk.Our 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.61Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Fair Value Measured on a Recurring BasisFinancial assets and financial liabilities measured at fair value on a recurring basis consist of the following:As of April 1, 2017Level 1 Level 2 Total(In thousands) Assets Money market funds$80,676 $— $80,676Designated foreign currency hedge contracts— 1,645 1,645Non-designated foreign currency hedge contracts— 218 218Designated interest rate swaps— 64 64 $80,676 $1,927 $82,603Liabilities Designated foreign currency hedge contracts$— $894 $894Non-designated foreign currency hedge contracts$— $72 $72 $— $966 $966As of April 2, 2016Level 1 Level 2 Total(In thousands) Assets Money market funds$72,491 $— $72,491Designated foreign currency hedge contracts— 335 335Non-designated foreign currency hedge contracts— 92 92 $72,491 $427 $72,918Liabilities Designated foreign currency hedge contracts$— $3,910 $3,910Non-designated foreign currency hedge contracts— 146 146Designated interest rate swaps— 154 154 $— $4,210 $4,210Other Fair Value DisclosuresThe Term Loan (which is carried at amortized cost), accounts receivable and accounts payable approximate fair value. Details pertaining to the Term Loancan be found in Note 7, Notes Payable and Long-Term Debt.7. NOTES PAYABLE AND LONG-TERM DEBTNotes payable and long-term debt consisted of the following:(In thousands)April 1, 2017 April 2, 2016Term loan, net of financing fees$314,218 $406,175Bank loans and other borrowings429 1,825Less current portion(61,022) (43,471)Long-term debt$253,625 $364,529On August 1, 2012, we entered into a credit agreement ("Credit Agreement") with certain lenders (together, “Lenders”) which provided for a $475.0 millionterm loan ("Term Loan") and a $50.0 million revolving loan (“Revolving Credit Facility” and together with the Term Loan, the “Credit Facilities”). On June30, 2014, we modified our existing Credit Facilities by extending the maturity date to July 1, 2019, extending the principal repayments of the Term Loan,and modifying certain restrictive covenants to allow greater operational flexibility and enhanced near term liquidity. The amended Credit Agreementprovides for a $100.0 million Revolving Credit Facility and establishes interest rates in the range of LIBOR plus 1.125% to 1.500% depending on certainconditions. At April 1, 2017, $315.4 million was outstanding under the Term Loan with an interest rate of 2.25% and no amount was outstanding on theRevolving Credit Facility. No additional amounts were borrowed62Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as a result of this modification. The fair value of debt approximates its current value of approximately $315.4 million as of April 1, 2017.Under the terms of this Credit Agreement, the Company may borrow at a spread to an index, including the LIBOR index of 1-month, 3-months, 6-months, etc.From the date of the Credit Agreement, the Company has chosen to borrow against the 1-month USD-LIBOR-BBA rounded up, if necessary, to the nearest1/16th of 1%. The terms of the Credit Agreement also allow the Company to borrow in multiple tranches. The Company currently borrows in four tranches.Interest for the Credit Facilities was based on Adjusted LIBOR plus a range of 1.125% to 1.500% depending on the achievement of leverage ratios andcustomary credit terms which included financial and negative covenants. Revolving loans may be borrowed, repaid and re-borrowed to fund our workingcapital needs and for other general corporate purposes. The current margin of the Term Loan is 1.250% over Adjusted LIBOR and our effective interest rateinclusive of prepaid financing costs and other fees was approximately 2.25% as of April 1, 2017. The Term Loan or portions thereof may be prepaid at anytime, or from time to time without penalty. Once repaid, such amount may not be re-borrowed.Under the Credit Facilities, we are required to maintain a Consolidated Total Leverage Ratio not to exceed 3.0:1.0 and a Consolidated Interest CoverageRatio not to be less than 4.0:1.0 during periods when the Credit Facilities are outstanding. In addition, we are required to satisfy these covenants, on a proforma basis, in connection with any new borrowings (including any letter of credit issuances) on the Revolving Credit Facility as of the time of suchborrowings. The Consolidated Interest Coverage Ratio is calculated as the Consolidated EBITDA divided by Consolidated Interest Expense while theConsolidated Total Leverage Ratio is calculated as Consolidated Total Debt divided by Consolidated EBITDA. Consolidated EBITDA includes EBITDAadjusted by non-recurring and unusual transactions specifically as defined in the Credit Facilities.The Credit Facilities also contain usual and customary non-financial affirmative and negative covenants which include certain restrictions with respect tosubsequent indebtedness, liens, loans and investments (including acquisitions), financial reporting obligations, mergers, consolidations, dissolutions orliquidation, asset sales, affiliate transactions, change of our business, capital expenditures, share repurchase and other restricted payments. These covenantsare subject to important exceptions and qualifications set forth in the Credit Agreement.Any failure to comply with the financial and operating covenants of the Credit Facilities would prevent us from being able to borrow additional funds andwould constitute a default, which could result in, among other things, the amounts outstanding including all accrued interest and unpaid fees, becomingimmediately due and payable. In addition, the Credit Facilities include customary events of default, in certain cases subject to customary cure periods. As ofApril 1, 2017, we were in compliance with the covenants. The goodwill and intangible asset impairment charges discussed in Note 5, Goodwill andIntangible Assets, and the property, plant and equipment impairment charges discussed in Note 12, Property Plant and Equipment, are excluded from thedefinition of Consolidated EBITDA in the Credit Agreement.Commitment feePursuant to the Credit Agreement, we are required to pay the Lenders, on the last day of each calendar quarter, a commitment fee on the unused portion of theRevolving Credit Facility. The commitment fee is subject to a pricing grid based on our Consolidated Total Leverage Ratio. The commitment fee ranges from0.175% to 0.300%. The current commitment fee on the undrawn portion of the Revolving Credit Facility is 0.200%.Debt issuance costs and interestExpenses associated with the issuance of the Term Loan were capitalized and are amortized to interest expense over the life of the term loan using theeffective interest method. As of April 1, 2017, the $315.4 million term loan balance was netted down by the $1.2 million of remaining debt discount,resulting in a net note payable of $314.2 million.Interest expense was $7.9 million and $8.5 million for fiscal years ended April 1, 2017 and April 2, 2016, respectively. Accrued interest associated with ouroutstanding debt is included as a component of accrued expenses and other current liabilities in the accompanying consolidated balance sheets. As of bothApril 1, 2017 and April 2, 2016, we had an insignificant amount of accrued interest associated with our outstanding debt.63Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Maturity ProfileThe maturity profile of all gross long-term debt, exclusive of debt discounts, as of April 1, 2017 is presented below:Fiscal year (in thousands) Credit Facilities Bank loans andother borrowings Total2018 $61,654 $156 $61,8102019 194,445 138 194,5832020 59,282 100 59,3822021 — 28 282022 — 2 2Thereafter — 5 5 $315,381 $429 $315,8108. INCOME TAXESDomestic and foreign income before provision for income tax is as follows:(In thousands)2017 2016 2015Domestic$(44,724) $(18,526) $(17,265)Foreign17,248 (34,890) 48,430Total$(27,476) $(53,416) $31,165The income tax provision from continuing operations contains the following components:(In thousands)2017 2016 2015Current Federal$(1,424) $12 $3,526State436 (660) 898Foreign6,580 3,842 5,614Total current$5,592 $3,194 $10,038Deferred Federal(8,711) 3,532 1,227State(953) 319 3,215Foreign2,864 (4,882) (212)Total deferred$(6,800) $(1,031) $4,230Total$(1,208) $2,163 $14,268Our subsidiary in Puerto Rico has been granted a fifteen year tax grant which expires in calendar 2027. Our qualification for the tax grant is dependent on thecontinuation of our manufacturing activities in Puerto Rico. We benefit from a reduced tax rate on our earnings in Puerto Rico under the tax grant.Our subsidiary in Switzerland operates as a principal company for direct federal tax purposes. Operating under this structure affords our Swiss subsidiary areduced tax rate in Switzerland. Our Swiss subsidiary also operates under a 10 year tax holiday set to expire in fiscal 2018.Our subsidiary in Malaysia has been granted a full income tax exemption to manufacture whole blood and apheresis devices that could be in effect for up toten years, provided certain conditions are satisfied. The income tax exemption was in effect beginning June 1, 2016.64Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Tax affected, significant temporary differences comprising the net deferred tax liability are as follows:(In thousands)April 1, 2017 April 2, 2016Deferred tax assets: Depreciation$934 $1,749Amortization of intangibles1,150 4,417Inventory7,419 7,607Hedging— 382Accruals, reserves and other deferred tax assets13,907 12,590Net operating loss carry-forward11,742 13,484Stock based compensation6,014 9,622Tax credit carry-forward, net17,852 16,191Gross deferred tax assets59,018 66,042Less valuation allowance(25,872) (24,297)Total deferred tax assets (after valuation allowance)33,146 41,745Deferred tax liabilities: Depreciation(30,422) (28,972)Amortization of goodwill and intangibles(7,732) (23,626)Unremitted earnings(1,065) (700)Other deferred tax liabilities(2,053) (2,769)Total deferred tax liabilities(41,272) (56,067)Net deferred tax liabilities$(8,126) $(14,322)The valuation allowance increased by $1.6 million during fiscal 2017, primarily as the result of discrete valuation allowance establishments in several of ourforeign subsidiaries, current year income and loss and tax credits generated in domestic and foreign jurisdictions in which we have concluded that ourdeferred tax assets are not more-likely-than-not realizable and the impact of foreign exchange. In determining the need for a valuation allowance, we havegiven consideration for our worldwide cumulative loss position, resulting from significant impairment and restructuring charges incurred in fiscal 2017 and2016, when assessing the weight of the sources of taxable income that can be used to support the realizability of our deferred tax assets. We have assessed, ona jurisdictional basis, the available means of recovering deferred tax assets, including the ability to carry-back net operating losses, the existence of reversingtemporary differences, the availability of tax planning strategies and available sources of future taxable income. We have also considered the ability toimplement certain strategies that would, if necessary, be implemented to accelerate taxable income and use expiring deferred tax assets. We believe we areable to support the deferred tax assets recognized as of the end of the year based on all of the available evidence. The worldwide net deferred tax liability asof April 1, 2017 includes deferred tax liabilities related to amortizable tax basis in goodwill, which are indefinite lived and are not considered to be a sourceof taxable income.As of April 1, 2017, we maintain a valuation allowance against our U.S. net deferred tax assets that are not more-likely-than-not realizable and a fullvaluation allowance against the net deferred tax assets of certain foreign subsidiaries.As of April 1, 2017, we have U.S. federal net operating loss carry-forwards of approximately $23.3 million, U.S. state net operating loss carry-forwards of $33million, federal tax credit carry-forwards of $15.1 million and state tax credit carry-forwards of $4.2 million that are available to reduce future taxable income.A portion of the federal net operating losses are subject to an annual limitation due to the ownership change limitations set forth under Internal RevenueCode Sections 382. Certain of the aforementioned amounts have not been recognized because they relate to excess stock based compensation. At April 1,2017, $4.0 million of the federal net operating loss carry-forwards, $5.2 million of the state net operating loss carry-forwards, none of the federal tax creditcarry-forwards and none of the state tax credit carry-forwards relate to excess stock based compensation tax deductions. We will record these off balance sheetnet operating losses as a deferred tax asset, offset with an increase in the valuation allowance upon the adoption of ASU 2016-09. The federal and state netoperating losses begin to expire in fiscal 2022 and 2019, respectively. The federal and state tax credits begin to expire in fiscal 2024 and 2025, respectively.65Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Our net operating loss and tax credit carry-forwards may become subject to an annual limitation in the event of certain cumulative changes in the ownershipinterest of significant shareholders over a three-year period in excess of 50 percent as defined under Section 382 and 383 of the U.S. Internal Revenue Codeof 1986, respectively, as well as similar state provisions. The amount of the annual limitation is determined based on the value of the Company immediatelyprior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. As a result, if we earn net taxable income, ourability to use our pre-change net operating loss carry-forward to offset U.S. federal taxable income may be subject to limitations, which could potentiallyresult in increased future tax liability to us.As of April 1, 2017, we have foreign net operating losses of approximately $19.2 million that are available to reduce future income having unlimited carry-forward.As of April 1, 2017, we have provided $1.1 million of U.S. deferred taxes on approximately $8.4 million of unremitted earnings which are not indefinitelyreinvested. Of this amount, $0.1 million affected the Company's effective tax rate in fiscal 2017. We have not provided U.S. deferred income taxes or foreignwithholding taxes on unremitted earnings of foreign subsidiaries of approximately $233.0 million as such amounts are considered to be indefinitelyreinvested in the business. The accumulated earnings in the foreign subsidiaries are primarily utilized to fund working capital requirements as oursubsidiaries continue to expand their operations, to service existing debt obligations and to fund future foreign acquisitions. We do not believe it ispracticable to estimate the amount of income taxes payable on the earnings that are indefinitely reinvested in foreign operations.The income tax provision from continuing operations differs from tax provision computed at the 35.0% U.S. federal statutory income tax rate due to thefollowing:(In thousands)2017 2016 2015Tax at federal statutory rate$(9,616) 35.0 % $(18,695) 35.0 % $10,907 35.0 %Difference between U.S. and foreign tax137 (0.5)% 10,645 (19.9)% (6,929) (22.2)%State income taxes net of federal benefit(495) 1.8 % 134 (0.3)% (818) (2.6)%Change in uncertain tax positions862 (3.1)% (1,820) 3.4 % (1,762) (5.7)%Unremitted earnings330 (1.2)% 735 (1.4)% — — %Deferred statutory rate changes(383) 1.4 % (2,653) 5.0 % — — %Non-deductible goodwill impairment3,703 (13.5)% 2,861 (5.4)% — — %Non-deductible expenses896 (3.2)% 1,491 (2.8)% 1,237 4.0 %Research credits(561) 2.0 % (672) 1.3 % (1,000) (3.2)%Tax amortization of goodwill(10,564) 38.4 % 4,185 (7.8)% 3,826 12.3 %Valuation allowance13,505 (49.2)% 5,194 (9.7)% 8,524 27.4 %Other, net978 (3.5)% 758 (1.4)% 283 0.8 %Income tax (benefit) provision$(1,208) 4.4 % $2,163 (4.0)% $14,268 45.8 %We recorded an income tax benefit of $1.2 million, representing an effective tax rate of 4.4%. The effective tax rate differs from the U.S. statutory rate of35.0% primarily as a result of the jurisdictional mix of earnings and losses generated in the U.S. and certain foreign subsidiaries that have a valuationallowance and therefore cannot be benefited. Other significant items impacting the rate include the tax provision related to the amortization of U.S. goodwillfor tax purposes which gives rise to an indefinite lived deferred tax liability and the current year goodwill impairments. We have recorded a $0.1 million taxprovision associated with the portion of unremitted foreign earnings that are not considered indefinitely reinvested.Unrecognized Tax BenefitsUnrecognized tax benefits represent uncertain tax positions for which reserves have been established. As of April 1, 2017, we had $3.4 million ofunrecognized tax benefits, of which $1.5 million would impact the effective tax rate, if recognized. As of April 2, 2016, we had $2.5 million of unrecognizedtax benefits, of which $0.6 million would impact the effective tax rate, if recognized. At March 28, 2015, we had $7.1 million of unrecognized tax benefits,all of which $2.0 million would impact the effective tax rate, if recognized.During the fiscal year ended April 1, 2017 our unrecognized tax benefits were increased by $0.8 million. An increase of $1.3 million in our uncertain taxpositions was triggered by a reduction in workforce which impacts a previously negotiated tax holiday that requires us to maintain certain levels ofheadcount for a multi-year period. The establishment of this tax reserve is offset by the release of other reserves as a result of the closure of tax statutes oflimitations.66Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The following table summarizes the activity related to our gross unrecognized tax benefits for the fiscal years ended April 1, 2017, April 2, 2016 andMarch 28, 2015:(In thousands)April 1, 2017 April 2, 2016 March 28, 2015Beginning Balance$2,523 $7,070 $5,604Additions for tax positions of prior years1,279 340 3,234Reductions of tax positions(29) (4,158) —Settlements with taxing authorities— — (338)Closure of statute of limitations(403) (729) (1,430)Ending Balance$3,370 $2,523 $7,070As of April 1, 2017 we anticipate that the liability for unrecognized tax benefits for uncertain tax positions could change by up to $1.5 million in the nexttwelve months, as a result of closure of various statutes of limitations and potential settlements with tax authorities.Our historic practice has been and continues to be to recognize interest and penalties related to federal, state and foreign income tax matters in income taxexpense. Approximately $0.2 million and $0.4 million of gross interest and penalties were accrued at April 1, 2017 and April 2, 2016, respectively, and is notincluded in the amounts above. There was a benefit included in tax expense associated with accrued interest and penalties of $0.2 million, $0.3 million and$0.3 million for the periods ended April 1, 2017, April 2, 2016 and March 28, 2015, respectively.We conduct business globally and, as a result, file consolidated and separate federal, state and foreign income tax returns in multiple jurisdictions. In thenormal course of business, we are subject to examination by taxing authorities throughout the world. With a few exceptions, we are no longer subject to U.S.federal, state, or local income tax examinations for years before fiscal 2014 and foreign income tax examinations for years before fiscal 2012. To the extentthat we have tax attribute carry-forwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal RevenueService, state, or foreign tax authorities to the extent utilized in a future period.9. COMMITMENTS AND CONTINGENCIESWe lease facilities and certain equipment under operating leases expiring at various dates through fiscal 2028. Facility leases require us to pay certaininsurance expenses, maintenance costs and real estate taxes.Approximate future basic rental commitments under operating leases as of April 1, 2017 are as follows:Fiscal Year (In thousands) 2018$4,29820192,96620201,90620211,72220221,623Thereafter7,031 $19,546Rent expense in fiscal 2017, 2016, and 2015 was $6.2 million, $6.8 million and $6.3 million, respectively. Some of the Company's operating leases includerenewal provisions, escalation clauses and options to purchase the facilities that we lease.We are presently engaged in various legal actions, and although our ultimate liability cannot be determined at the present time, we believe, based onconsultation with counsel, that any such liability will not materially affect our consolidated financial position or our results of operations.Italian Employment LitigationOur Italian manufacturing subsidiary is party to several actions initiated by former employees of our facility in Ascoli-Piceno, Italy. We ceased operations atthe facility in fiscal 2014 and sold the property in fiscal 2017. These include actions claiming (i)67Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)working conditions and minimum salaries should have been established by either a different classification under their national collective bargainingagreement or a different agreement altogether, (ii) certain solidarity agreements, which are arrangements between the Company, employees and thegovernment to continue full pay and benefits for employees who would otherwise be terminated in times of low demand, are void, and (iii) rights to paymentof the extra time used for changing into and out of their working clothes at the beginning and end of each shift.In addition, a union represented in the Ascoli plant filed an action alleging that the Company discriminated against it in favor of three other representedunions by (i) interfering with an employee referendum, (ii) interfering with an employee petition to recall union representatives from office, and (iii)excluding the union from certain meetings.Finally, we have been added as defendants on claims filed against Pall Corporation prior to our acquisition of the plant in August 2012. These claims relateto agreements to "freeze" benefit allowances for a certain period in exchange for Pall's commitments on hiring and plant investment.As of April 1, 2017, the total amount of damages claimed by the plaintiffs in these matters is approximately $4.4 million. At this point in the proceedings, webelieve the losses are unlikely and therefore no amounts have been accrued. In the future, we may receive adverse rulings from the courts which could changeour judgment on these cases.SOLX ArbitrationIn July 2016, H2 Equity, LLC, formerly known as Hemerus Corporation, filed an arbitration claim for $17 million in milestone and royalty paymentsallegedly owed as part of our acquisition of the filter and storage solution business from Hemerus Medical, LLC ("Hemerus") in fiscal 2014. The acquiredstorage solution is referred to as SOLX.At the closing in April 2013, Haemonetics paid Hemerus a total of $24 million and agreed to a $3 million milestone payment due when the U.S. Food andDrug Administration ("FDA") approved a new indication for SOLX (the “24-Hour Approval”) using a filter acquired from Hemerus. We also agreed to makefuture royalty payments up to a cumulative maximum of $14 million based on the sale of products incorporating SOLX over a ten year period.Due to performance issues with the Hemerus filter, Haemonetics filed for, and received, the 24-Hour Approval using a Haemonetics filter. Accordingly,Haemonetics did not pay Hemerus the $3 million milestone payment because the 24-Hour Approval was obtained using a Haemonetics filter, not a Hemerusfilter. In addition, we have not paid any royalties to date as we have not made any sales of products incorporating SOLX. H2 Equity claims, in part, that we owe them $3 million for the receipt of the 24-Hour Approval despite the use of a Haemonetics filter to obtain the approvaland that we have failed to make commercially reasonable efforts to market and sell products incorporating SOLX. We believe that we have meritoriousdefenses to these claims.It is not possible to accurately evaluate the likelihood or amount of any potential losses related to this claim and therefore no amounts have been accrued.Product RecallIn June 2016, we issued a voluntary recall of certain whole blood collection kits sold to our Blood Center customers in the U.S. The recall resulted from somecollection sets' filters failing to adequately remove leukocytes from collected blood. As a result of the recall, our blood center customers may have conductedfurther tests to confirm the blood was adequately leukoreduced, sold the blood labeled as non-leukoreduced at a lower price or discarded the blood collectedusing the defective sets. As a result of the recall, we have recorded total charges of $7.1 million during fiscal 2017, which consists of $3.7 million of chargesassociated with customer returns and inventory reserves and $3.4 million of charges associated with customer claims, as discussed below. We may recordincremental charges in future periods.We determined that the affected sets were distributed between April and June 2016. Credits have been issued to customers who returned affected setspurchased during this period. During fiscal 2017, we recorded charges of $3.7 million, which consisted of $2.5 million of sales returns, $1.1 million of netinventory reserves for the affected collection sets on-hand that had not yet been shipped to customers and $0.1 million of freight expenses.The $3.4 million of charges associated with customer claims are based on claims seeking reimbursement for $14.2 million in losses sustained as a result of therecall. We believe it is probable that we will incur expenses as a result of these claims and that our range of loss is $3.4 million to $14.2 million, however, wedo not have sufficient information to develop a best estimate within this range. Accordingly, we have recorded a liability of $3.4 million, which representsthe low end of the range. While the customers making these claims purchased substantially all the affected units, incremental charges may be recorded infuture periods as additional customer returns and claims data becomes available. We have an enforceable insurance policy in68Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)place which we believe provides coverage for a portion of the claims received to date. Accordingly, as of April 1, 2017, we had an insurance receivable of$2.9 million. We will assess the potential for additional insurance recoveries as we receive more information about customer claims in future reportingperiods.10. CAPITAL STOCKStock PlansThe 2005 Long-Term Incentive Compensation Plan (the “2005 Incentive Compensation Plan”) permits the award of non-qualified stock options, incentivestock options, stock appreciation rights, restricted stock, deferred stock/restricted stock units, other stock units and performance shares to the Company’s keyemployees, officers and directors. The 2005 Incentive Compensation Plan is administered by the Compensation Committee of the Board of Directors (the“Committee”) consisting of three independent members of our Board of Directors.The maximum number of shares available for award under the 2005 Incentive Compensation Plan is 19,824,920. The maximum number of shares that may beissued pursuant to incentive stock options may not exceed 500,000. Any shares that are subject to the award of stock options shall be counted against thislimit as one share for every one share issued. Any shares that are subject to awards other than stock options shall be counted against this limit as 3.02 sharesfor every one share granted. The total shares available for future grant as of April 1, 2017 were 5,045,728.Stock-Based CompensationCompensation cost related to stock-based transactions is recognized in the consolidated financial statements based on fair value. The total amount of stock-based compensation expense, which is recorded on a straight line basis, was as follows:(In thousands)2017 2016 2015Selling, general and administrative expenses$6,894 $5,183 $11,251Research and development1,549 1,060 1,706Cost of goods sold707 706 1,138 $9,150 $6,949 $14,095We did not recognize an income tax benefit associated with our stock-based compensation arrangements for the fiscal years ended April 1, 2017 and April 2,2016. We recognized an income tax benefit associated with our stock-based compensation arrangements of $4.5 million for the fiscal year ended March 28,2015. There was no excess cash tax benefit classified as a financing cash inflow in fiscal 2017 and 2016. The excess cash tax benefit classified as a financingcash inflow in fiscal 2015 was $1.6 million.Stock OptionsOptions are granted to purchase ordinary shares at prices as determined by the Committee, but in no event shall such exercise price be less than the fairmarket value of the common stock at the time of the grant. Options generally vest in equal installments over a four year period for employees and one yearfrom grant for non-employee directors. Options expire not more than 7 years from the date of the grant. The grant-date fair value of options, adjusted forestimated forfeitures, is recognized as expense on a straight line basis over the requisite service period, which is generally the vesting period. Forfeitures areestimated based on historical experience.69Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)A summary of stock option activity for the fiscal year ended April 1, 2017 is as follows: OptionsOutstanding(shares) WeightedAverageExercise Priceper Share WeightedAverageRemainingLife (years) AggregateIntrinsicValue($000’s)Outstanding at April 2, 20162,951,183 $33.59 3.34 $9,684Granted501,127 32.47 Exercised(1,083,824) 28.79 Forfeited/Canceled(329,691) 35.95 Outstanding at April 1, 20172,038,795 $35.51 3.88 $10,963 Exercisable at April 1, 20171,284,592 $37.04 2.66 $5,129 Vested or expected to vest at April 1, 20171,906,548 $35.69 4.24 $9,937The total intrinsic value of options exercised was $8.3 million, $4.5 million, and $5.6 million during fiscal 2017, 2016, and 2015, respectively.As of April 1, 2017, there was $4.9 million of total unrecognized compensation cost related to non-vested stock options. This cost is expected to berecognized over a weighted average period of 3.09 years.The fair value was estimated using the Black-Scholes option-pricing model based on the weighted average of the high and low stock prices at the grant dateand the weighted average assumptions specific to the underlying options. Expected volatility assumptions are based on the historical volatility of ourcommon stock over the expected term of the option. The risk-free interest rate was selected based upon yields of U.S. Treasury issues with a term equal to theexpected life of the option being valued. The expected life of the option was estimated with reference to historical exercise patterns, the contractual term ofthe option and the vesting period.The assumptions utilized for option grants during the periods presented are as follows: 2017 2016 2015Volatility24.0% 22.8% 22.5%Expected life (years)4.9 4.9 4.9Risk-free interest rate1.2% 1.4% 1.5%Dividend yield0.0% 0.0% 0.0%Fair value per option$7.61 $7.40 $7.91Restricted Stock UnitsRestricted Stock Units ("RSUs") generally vest in equal installments over a four year period for employees and one year from grant for non-employeedirectors. The grant-date fair value of RSUs, adjusted for estimated forfeitures, is recognized as expense on a straight-line basis over the requisite serviceperiod, which is generally the vesting period. The fair market value of RSUs is determined based on the market value of the Company’s shares on the date ofgrant.A summary of RSU activity for the fiscal year ended April 1, 2017 is as follows: Shares WeightedAverageGrant Date Fair ValueUnvested at April 2, 2016380,871 $34.33Granted212,105 32.61Vested(150,113) 34.98Forfeited(101,222) 33.70Unvested at April 1, 2017341,641 $33.1670Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The weighted-average grant-date fair value of RSUs granted and total fair value of RSUs vested were as follows:(In thousands, except per share data)2017 2016 2015Grant-date fair value per RSU$32.61 $33.19 $34.89Fair value of RSUs vested$34.98 $36.07 $36.62As of April 1, 2017, there was $8.4 million of total unrecognized compensation cost related to non-vested restricted stock units. This cost is expected to berecognized over a weighted average period of 2.87 years.Performance Stock UnitsThe grant date fair value of Performance Stock Units ("PSUs"), adjusted for estimated forfeitures, is recognized as expense on a straight line basis from thegrant date through the end of the performance period. The value of these PSUs is based on relative shareholder return which equals total shareholder return forthe Company as compared to total shareholder return of the PSU comparison group, measured over a three year performance period. Depending on theCompany's relative performance during the performance period, a recipient of the award is entitled to receive a number of ordinary shares equal to apercentage, ranging from 0% to 200%, of the award granted. As a result, we may issue up to 569,250 shares related to these awards. If the Company’s totalshareholder return for the performance period is negative, then any share payout will be capped at 100% of the target award, regardless of the Company'sperformance relative to the Company's comparison group.PSUs granted in fiscal 2016 and 2015 have a comparison group consisting of the Standard and Poor's ("S&P") Health Care Equipment Index, while PSUsgranted in fiscal 2017 have a comparison group consisting of the S&P Small Cap 600 and the S&P Mid Cap 400 indices.In addition to these relative shareholder return PSUs, the Company's Chief Executive Officer, upon hire, received a PSU grant with performance conditionsbased on the financial results of the Company and other internal metrics.A summary of PSU activity for the fiscal year ended April 1, 2017 is as follows: Shares WeightedAverageGrant Date Fair ValueUnvested at April 2, 2016102,336 $31.38Granted228,884 34.07Vested— —Forfeited(46,595) 30.68Unvested at April 1, 2017284,625 $33.66The Company uses the Monte Carlo model to estimate the probability of satisfying the performance criteria and the resulting fair value of PSU awards withmarket conditions. The assumptions used in the Monte Carlo model for PSUs granted during each year were as follows: 2017 2016 2015Expected stock price volatility26.39% 22.27% 20.08%Peer group stock price volatility33.86% 31.95% 31.52%Correlation of returns51.17% 26.27% 30.52%The weighted-average grant-date fair value of PSUs granted was $34.07, $29.20 and $35.09 in fiscal 2017, 2016, and 2015 respectively.As of April 1, 2017, there was $7.8 million of total unrecognized compensation cost related to non-vested performance share units. This cost is expected to berecognized over a weighted average period of 2.29 years.Market Stock UnitsThe Company used the Monte Carlo model to determine the fair value of each market stock unit granted in fiscal 2016 and 2015. The grant date fair value ofMarket Stock Units ("MSUs"), adjusted for estimated forfeitures, was recognized as expense on a straight line basis from the grant date through the end of theperformance period. The value of these MSUs was based the performance of Haemonetics’ stock through March 31, 2017. Because Haemonetics' stock wasbelow the minimum threshold71Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)price of $50 per share during the relevant measurement period, the holders received no market share units upon vesting. There were no MSUs granted in fiscal2017.A summary of MSU activity for the fiscal year ended April 1, 2017 is as follows: Shares WeightedAverageGrant Date Fair ValueUnvested at April 2, 2016152,968 $24.84Granted— —Vested(116,550) —Forfeited(36,418) 13.42Unvested at April 1, 2017— $—Employee Stock Purchase PlanThe Company has an Employee Stock Purchase Plan (the “Purchase Plan”) under which a maximum of 3,200,000 shares (subject to adjustment for stocksplits and similar changes) of common stock may be purchased by eligible employees. Substantially all of our full-time employees are eligible to participatein the Purchase Plan.The Purchase Plan provides for two “purchase periods” within each of our fiscal years, the first commencing on November 1 of each year and continuingthrough April 30 of the next calendar year, and the second commencing on May 1 of each year and continuing through October 31 of such year. Shares arepurchased through an accumulation of payroll deductions (of not less than 2% or more than 15% of compensation, as defined) for the number of whole sharesdetermined by dividing the balance in the employee’s account on the last day of the purchase period by the purchase price per share for the stock determinedunder the Purchase Plan. The purchase price for shares is the lower of 85% of the fair market value of the common stock at the beginning of the purchaseperiod, or 85% of such value at the end of the purchase period.The fair values of shares purchased under the Employee Stock Purchase Plan are estimated using the Black-Scholes single option-pricing model with thefollowing weighted average assumptions: 2017 2016 2015Volatility31.3% 21.1% 23.7%Expected life (months)6 6 6Risk-free interest rate—% 0.2% 0.1%Dividend Yield0.0% 0.0% 0.0%The weighted average grant date fair value of the six-month option inherent in the Purchase Plan was approximately $7.79, $7.80, and $7.09 during fiscal2017, 2016, and 2015, respectively.72Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)11. EARNINGS PER SHARE (“EPS”)The following table provides a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations.(In thousands, except per share amounts)2017 2016 2015Basic EPS Net (loss) income$(26,268) $(55,579) $16,897Weighted average shares51,524 50,910 51,533Basic (loss) income per share$(0.51) $(1.09) $0.33Diluted EPS Net (loss) income$(26,268) $(55,579) $16,897Basic weighted average shares51,524 50,910 51,533Net effect of common stock equivalents— — 556Diluted weighted average shares51,524 50,910 52,089Diluted (loss) income per share$(0.51) $(1.09) $0.32Basic earnings per share is calculated using our weighted-average outstanding common shares. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. For fiscal 2017 and 2016,we recognized a net loss; therefore we excluded the impact of outstanding stock awards from the diluted loss per share calculation as their inclusion wouldhave an anti-dilutive effect. Fiscal 2015 weighted average shares outstanding, assuming dilution, excludes the impact of 1.6 million stock options andrestricted share units because either the effect would have been anti-dilutive or the performance criteria related to the units had not yet been met.12. PROPERTY, PLANT AND EQUIPMENTProperty and equipment consisted of the following:(In thousands) April 1, 2017 April 2, 2016Land $7,389 $7,905Building and building improvements 109,933 117,132Plant equipment and machinery 253,693 238,549Office equipment and information technology 129,753 127,019Haemonetics equipment 306,714 295,853 Total 807,482 786,458Less: accumulated depreciation and amortization (483,620) (448,824)Property, plant and equipment, net $323,862 $337,634During fiscal 2017, we impaired $13.3 million of property, plant and equipment as a result of our review of non-core and underperforming assets and ourdecision to discontinue the use of and investment in certain assets, of which $0.8 million was included within impairment of assets on the consolidatedstatements of (loss) income and the remaining $12.5 million was included within cost of goods sold. These impairments impacted Americas Blood Center andHospital, North America Plasma and EMEA segments by $10.6 million, $1.7 million and $1.0 million, respectively.During fiscal 2016, we impaired $9.1 million of property, plant and equipment as a result of our global strategic review, of which $6.9 million was includedwithin impairment of assets on the consolidated statements of (loss) income and the remaining $2.2 million was included within cost of goods sold. Theseimpairments impacted our Americas Blood Center and Hospital and EMEA segments by $3.0 million and $6.1 million, respectively.Depreciation expense was $66.5 million and $56.8 million in fiscal 2017 and fiscal 2016, respectively, which includes $10.0 million and $0.8 million,respectively, of additional depreciation expense due to asset impairments. Depreciation expense was $52.6 million for fiscal 2015.73Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)13. RETIREMENT PLANSDefined Contribution PlansWe have a Savings Plus Plan (the "Plan") that is a 401(k) plan that allows our U.S. employees to accumulate savings on a pre-tax basis. In addition, matchingcontributions are made to the Plan based upon pre-established rates. Our matching contributions amounted to approximately $5.1 million, $5.4 million, and$5.8 million in fiscal 2017, 2016, and 2015, respectively. Upon Board approval, additional discretionary contributions can also be made. No discretionarycontributions were made for the Plan in fiscal 2017, 2016, or 2015.Some of our subsidiaries also have defined contribution plans, to which both the employee and the employer make contributions. The employercontributions to these plans totaled $0.8 million in both fiscal 2017 and 2016 and $1.0 million in fiscal 2015.Defined Benefit PlansASC Topic 715, Compensation — Retirement Benefits, requires an employer to: (a) recognize in its statement of financial position an asset for a plan’s over-funded status or a liability for a plan’s under-funded status; (b) measure a plan’s assets and its obligations that determine its funded status as of the end of theemployer’s fiscal year (with limited exceptions); and (c) recognize changes in the funded status of a defined benefit post retirement plan in the year in whichthe changes occur. Accordingly, the Company is required to report changes in its funded status in comprehensive loss on its consolidated statement ofstockholders’ equity and consolidated statement of comprehensive income (loss).Benefits under these plans are generally based on either career average or final average salaries and creditable years of service as defined in the plans. Theannual cost for these plans is determined using the projected unit credit actuarial cost method that includes actuarial assumptions and estimates which aresubject to change.Some of the our foreign subsidiaries have defined benefit pension plans covering substantially all full time employees at those subsidiaries. Net periodicbenefit costs for the plans in the aggregate include the following components:(In thousands)2017 2016 2015Service cost$3,404 $3,560 $2,979Interest cost on benefit obligation287 371 686Expected return on plan assets(308) (330) (449)Actuarial loss532 598 107Amortization of unrecognized prior service cost(119) (38) (29)Amortization of unrecognized transition obligation37 42 45Settlement loss recognized289 — —Totals$4,122 $4,203 $3,33974Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The activity under those defined benefit plans are as follows:(In thousands)April 1, 2017 April 2, 2016Change in Benefit Obligation: Benefit Obligation, beginning of year$(37,919) $(40,567)Service cost(3,404) (3,560)Interest cost(287) (371)Benefits paid1,291 3,780Actuarial gain4,615 424Employee and plan participants contribution(2,463) (1,839) Plan amendments— 833Plan settlements6,960 —Foreign currency changes(138) 3,381Benefit obligation, end of year$(31,345) $(37,919)Change in Plan Assets: Fair value of plan assets, beginning of year$19,852 $23,165Company contributions1,788 1,987Benefits paid(1,192) (3,779)Gain on plan assets414 446Employee and plan participants contributions2,424 1,861Plan settlements(6,850) —Foreign currency changes849 (3,828)Fair value of Plan Assets, end of year$17,285 $19,852Funded Status*$(14,060) $(18,067)Unrecognized net actuarial loss4,319 10,168Unrecognized initial obligation— 37Unrecognized prior service cost(1,019) (1,186)Net amount recognized$(10,760) $(9,048)* The unfunded status is all non-currentOne of the benefit plans is funded by benefit payments made by the Company through the purchase of reinsurance contracts which do not qualify as planassets under ASC Topic 715. Accordingly that plan has no assets included in the information presented above. The total liability for this plan was $8.8million and $8.7 million as of April 1, 2017 and April 2, 2016, respectively, and the total asset value associated with the reinsurance contracts was $5.4million as of both April 1, 2017 and April 2, 2016.The accumulated benefit obligation for all plans was $28.7 million and $36.4 million for the fiscal year ended April 1, 2017 and April 2, 2016, respectively.There were no plans where the plan assets were greater than the accumulated benefit obligation as of April 1, 2017 and April 2, 2016.75Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The components of the change recorded in our accumulated other comprehensive loss related to our defined benefit plans, net of tax, are as follows (inthousands):Balance, March 29, 2014$(4,592)Obligation at transition(19)Actuarial loss(6,198)Prior service cost1,886Balance as of March 28, 2015$(8,923)Obligation at transition33Actuarial loss681Prior service cost717Balance as of April 2, 2016$(7,492)Obligation at transition32Actuarial loss5,126Prior service cost63Balance as of April 1, 2017$(2,271)We expect to amortize $0.2 million from accumulated other comprehensive loss to net periodic benefit cost during fiscal 2018.The weighted average rates used to determine the net periodic benefit costs and projected benefit obligations were as follows: 2017 2016 2015Discount rate0.76% 0.72% 0.93%Rate of increased salary levels1.43% 1.58% 1.65%Expected long-term rate of return on assets1.10% 1.20% 1.68%Assumptions for expected long-term rate of return on plan assets are based upon actual historical returns, future expectations of returns for each asset classand the effect of periodic target asset allocation rebalancing. The results are adjusted for the payment of reasonable expenses of the plan from plan assets.We have no other material obligation for post-retirement or post-employment benefits.Our investment policy for pension plans is to balance risk and return through a diversified portfolio to reduce interest rate and market risk. Maturities aremanaged so that sufficient liquidity exists to meet immediate and future benefit payment requirements.ASC Topic 820, Fair Value Measurements and Disclosures, provides guidance for reporting and measuring the plan assets of our defined benefit pensionplan at fair value as of April 1, 2017. Using the same three-level valuation hierarchy for disclosure of fair value measurements as described in Note 6,Derivatives and Fair Value Measurements, all of the assets of the Company’s plan are classified within Level 2 of the fair value hierarchy because the planassets are primarily insurance contracts.Expected benefit payments for both plans are estimated using the same assumptions used in determining the company’s benefit obligation at April 1, 2017.Benefit payments will depend on future employment and compensation levels, average years employed and average life spans, among other factors, andchanges in any of these factors could significantly affect these estimated future benefit payments.76Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Estimated future benefit payments are as follows:(in thousands) Fiscal 2018$1,396Fiscal 20191,451Fiscal 20201,394Fiscal 20211,411Fiscal 20221,617Fiscal 2023-20276,869 $14,138The Company's contributions for fiscal 2018 are expected to be consistent with the current year.14. SEGMENT AND ENTERPRISE-WIDE INFORMATIONWe determine our reportable segments by first identifying our operating segments, and then by assessing whether any components of these segmentsconstitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of thatcomponent. Our operating segments are based primarily on geography. North America Plasma is a separate operating segment with dedicated segmentmanagement due the size and scale of the Plasma business unit. We aggregate components within an operating segment that have similar economiccharacteristics.The Company’s reportable segments are as follows:•Japan•EMEA•North America Plasma•All OtherThe Company has aggregated the Americas Blood Center and Hospital and Asia - Pacific operating segments into the All Other reportable segment basedupon their similar operational and economic characteristics, including similarity of operating margin.During the first quarter of fiscal 2017, management reorganized its operating segments such that certain components of All Other are now reported ascomponents of EMEA. Accordingly, the prior year numbers have been updated to reflect this reclassification as well as other changes within the costreporting structure that occurred in the first quarter of fiscal 2017. These changes did not have an impact on our ability to aggregate Americas Blood Centerand Hospital with Asia - Pacific.Management measures and evaluates the operating segments based on operating income. Management excludes certain corporate expenses from segmentoperating income. In addition, certain amounts that management considers to be non-recurring or non-operational are excluded from segment operatingincome because management evaluates the operating results of the segments excluding such items. These items include restructuring and turnaround costs,deal amortization, and asset impairments. Although these amounts are excluded from segment operating income, as applicable, they are included in thereconciliations that follow. Management measures and evaluates the Company's net revenues and operating income using internally derived standardcurrency exchange rates that remain constant from year to year, therefore segment information is presented on this basis.77Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Selected information by business segment is presented below:(In thousands)2017 2016 2015Net revenues Japan$74,695 $84,270 $83,547EMEA198,396 204,192 219,153North America Plasma309,718 279,803 240,705All Other316,771 342,249 340,427Net revenues before foreign exchange impact899,580 910,515 883,832Effect of exchange rates(13,464) (1,683) 26,541Net revenues$886,116 $908,832 $910,373(In thousands)2017 2016 2015Segment operating income Japan$32,906 $38,280 $36,843EMEA49,105 47,168 60,101North America Plasma105,253 109,220 89,092All Other109,296 120,562 131,471Segment operating income296,560 315,230 317,507 Corporate operating expenses176,372 199,072 193,910 Effect of exchange rates(4,772) 3,546 13,906Restructuring and turnaround costs34,337 42,185 69,697Deal amortization27,107 28,958 30,184Impairment of assets73,353 97,230 —Contingent consideration income— (4,727) (2,918)Operating (loss) income$(19,381) $(43,942) $40,540(In thousands)2017 2016 2015Depreciation and amortization Japan$827 $774 $767EMEA4,255 5,146 5,045North America Plasma13,022 12,944 11,229All Other71,629 71,047 69,012Total depreciation and amortization (excluding impairment charges)$89,733 $89,911 $86,053(In thousands)April 1, 2017 April 2, 2016 March 28, 2015Long-lived assets(1) Japan$21,412 $33,159 $31,810EMEA63,854 63,861 66,223North America Plasma142,164 116,001 101,272All Other96,432 124,613 122,643Total long-lived assets$323,862 $337,634 $321,948(1)Long-lived assets are comprised of property, plant and equipment.78Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Long-lived assets in our principle operating regions are as follows:(In thousands)April 1, 2017 April 2, 2016 March 28, 2015United States$241,610 $231,744 $208,439Japan1,691 2,022 1,618Europe12,952 18,672 27,786Asia34,174 40,235 39,032Other33,435 44,961 45,073Total$323,862 $337,634 $321,948In fiscal 2017, we organized our current products into four business units for purposes of evaluating their growth potential: Plasma, Blood Center, CellProcessing and Hemostasis Management. Management reviews revenue trends based on these business units, however, no other financial information iscurrently available on this basis.Net revenues by business unit are as follows:(In thousands)2017 2016 2015Plasma410,727 381,776 352,911Blood Center303,890 355,108 386,147Cell Processing105,376 112,483 120,434Hemostasis Management66,123 59,465 50,881Net revenues$886,116 $908,832 $910,373Net revenues generated in our principle operating regions are as follows:(In thousands)2017 2016 2015United States$522,686 $519,440 $494,788Japan79,266 81,411 88,298Europe166,007 187,725 215,575Asia109,858 111,758 102,095Other8,299 8,498 9,617Total$886,116 $908,832 $910,37315. RESTRUCTURINGOn an ongoing basis, we review the global economy, the healthcare industry, and the markets in which we compete to identify opportunities for efficiencies,enhance commercial capabilities, align our resources and offer our customers better solutions. In order to realize these opportunities, we undertakerestructuring-type activities to transform our business.During fiscal 2017, we launched a multi-year restructuring initiative designed to reposition our organization and improve our cost structure. This initiativeincludes a reduction of headcount and operating costs, simplification of certain product lines, and modification of manufacturing operations to align with ourstrategic direction.The fiscal 2017 phase was expected to incur approximately $26 million of restructuring and turnaround charges and was estimated to achieve cost savings of$40 million. During fiscal 2017, we incurred $28.7 million of restructuring and turnaround charges under this initiative and exceeded our estimated savingstarget of $40 million. As of April 1, 2017, this initial phase was substantially complete. Additionally, during fiscal 2017 and fiscal 2016, we recorded $5.6million and $42.3 million, respectively, of restructuring and turnaround charges under a prior program. We continue to assess non-core and underperformingassets and evaluate opportunities to improve our cost structure as part of our turnaround and expect to incur additional charges and benefits during fiscal2018 and beyond.79Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The following summarizes the restructuring activity for the fiscal year ended April 1, 2017, April 2, 2016, and March 28, 2015, respectively:(In thousands)Severance and OtherEmployee Costs Other Costs AcceleratedDepreciation AssetWrite Down Total RestructuringBalance at March 29, 2014$22,908 $728 $— $— $23,636Costs incurred19,879 15,362 1,326 296 36,863Payments(26,394) (15,871) — — (42,265)Non-cash adjustments— — (1,326) (296) (1,622)Balance at March 28, 2015$16,393 $219 $— $— $16,612Costs incurred10,707 7,846 1,469 3,033 23,055Payments(18,348) (8,065) — — (26,413)Non-cash adjustments— — (1,469) (3,033) (4,502)Balance at April 2, 2016$8,752 $— $— $— $8,752Costs incurred19,521 1,512 — 800 21,833Payments(20,866) (1,451) — — (22,317)Non-cash adjustments— — — (800) (800)Balance at April 1, 2017$7,407 $61 $— $— $7,468The substantial majority of restructuring expenses have been included as a component of selling, general and administrative expense in the accompanyingconsolidated statements of (loss) income. As of April 1, 2017, we had a restructuring liability of $7.5 million, of which, approximately $7.1 million is payablewithin the next twelve months.In addition to the restructuring expenses included in the table above, we also incurred $12.5 million, $19.2 million and $32.8 million in fiscal 2017, 2016and 2015, respectively, of costs that do not constitute as restructuring under ASC 420, which we refer to as "Turnaround Costs". These costs consist primarilyof expenditures directly related to our restructuring initiative and include program management, implementation of the global strategic review initiatives andaccelerated depreciation.The tables below present restructuring and turnaround costs by reportable segment:Restructuring costs (in thousands)2017 2016 2015Japan$819 $9 $258EMEA4,272 3,210 3,310North America Plasma366 — 360All Other16,376 19,836 32,935Total$21,833 $23,055 $36,863 Turnaround costs (in thousands)2017 2016 2015Japan$2 $416 $158EMEA94 961 838North America Plasma972 — 28All Other11,415 17,852 31,810Total$12,483 $19,229 $32,834 Total restructuring and turnaround$34,316 $42,284 $69,69780Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)16. CAPITALIZATION OF SOFTWARE DEVELOPMENT COSTSThe cost of software that is developed or obtained for internal use is accounted for pursuant to ASC Topic 350, Intangibles — Goodwill and Other. Pursuantto ASC Topic 350, we capitalize costs incurred during the application development stage of software developed for internal use, and expense costs incurredduring the preliminary project and the post-implementation operation stages of development. The costs capitalized for each project are included inintangible assets in the consolidated financial statements.For costs incurred related to the development of software to be sold, leased, or otherwise marketed, we apply the provisions of ASC Topic 985-20, Software -Costs of Software to be Sold, Leased or Marketed, which specifies that costs incurred internally in researching and developing a computer software productshould be charged to expense until technological feasibility has been established for the product. Once technological feasibility is established, all softwarecosts should be capitalized until the product is available for general release to customers.We capitalized $11.0 million and $17.0 million in software development costs for ongoing initiatives during the fiscal years ended April 1, 2017 and April 2,2016, respectively. At April 1, 2017 and April 2, 2016, we have a total of $62.7 million and $54.9 million of software costs capitalized, of which $12.7million and $14.4 million are related to in process software development initiatives, respectively, and the remaining balance represents in-service assets thatare being amortized over their useful lives. The costs capitalized for each project are included in intangible assets in the consolidated financial statements. Inconnection with these development activities, we capitalized interest of $0.3 million and $0.2 million in fiscal 2017 and 2016, respectively. We amortizecapitalized costs when the products are released for sale. During fiscal 2017, $9.5 million of capitalized costs were placed into service, compared to $8.7million of capitalized costs placed into service during fiscal 2016. Amortization of capitalized software development cost expense was $9.7 million, $10.9million and $3.2 million for fiscal 2017, 2016 and 2015, respectively. Amortization expense in fiscal 2017 and 2016 includes $4.0 million and $6.0 millionof impairment charges. These impairment charges are classified within costs of goods sold on our consolidated statements of (loss) income and relate tocapitalized software projects included in our All Other segment.17. SUMMARY OF QUARTERLY DATA (UNAUDITED)(In thousands) Three months endedFiscal 2017 July 2, 2016 October 1, 2016 December 31, 2016 April 1, 2017Net revenues $209,956 $220,253 $227,841 $228,066Gross profit $91,056 $104,248 $101,079 $82,111Operating income (loss) $(7,881) $24,794 $21,212 $(57,506)Net (loss) income $(10,346) $19,825 $15,393 $(51,140)Per share data: Net (loss) income: Basic $(0.20) $0.39 $0.30 $(0.98)Diluted $(0.20) $0.38 $0.30 $(0.98) (In thousands) Three months endedFiscal 2016 June 27, 2015 September 26, 2015 December 26, 2015 April 2, 2016Net revenues $213,413 $219,693 $233,384 $242,342Gross profit $102,539 $105,297 $108,855 $89,223Operating (loss) income $3,606 $19,179 $(61,177) $(5,550)Net (loss) income $(267) $12,863 $(59,440) $(8,735)Per share data: Net (loss) income: Basic $(0.01) $0.25 $(1.17) $(0.17)Diluted $(0.01) $0.25 $(1.17) $(0.17)81Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The operating results for the second and fourth quarters of fiscal 2017 and all four quarters of fiscal 2016 include certain misstatements that were determinedto be immaterial both individually and in the aggregate. The misstatement in the fourth quarter of fiscal 2017 was primarily driven by the correction of anerror in capitalized manufacturing variances which resulted in an overstatement of net loss in the fourth quarter of fiscal 2017 and an overstatement of netincome in the second quarter of fiscal 2017 and each quarter of fiscal 2016.The operating results for the first quarter of fiscal 2016 also include the correction of an understatement of the provision for income taxes in fiscal 2015 andthe operating results for the third quarter of fiscal 2016 also include the correction of an overstated liability in fiscal 2014.Below is a summary of the net overstatement/(understatement) of the Company’s reported operating income and net income for the second and fourthquarters of fiscal 2017 and all four quarters of fiscal 2016 as a result of the misstatements in each reporting period. In the fourth quarter of fiscal 2017 and thefirst, third and fourth quarters of fiscal 2016, the Company reported an operating loss, a net loss or both. For such periods, an understatement of income meansthat the reported loss was too high, while an overstatement of income means that the reported loss was too low.(In thousands) Overstatement/(Understatement)Three Months Ended Operating (Loss)Income Net (Loss) IncomeApril 1, 2017 (3,720) (4,032)October 1, 2016 888 1,224April 2, 2016 (3,352) (2,207)December 26, 2015 4,776 4,584September 26, 2015 1,193 933June 27, 2015 1,297 21918. ACCUMULATED OTHER COMPREHENSIVE LOSSThe following is a roll-forward of the components of accumulated other comprehensive loss, net of tax, for the years ended April 1, 2017 and April 2, 2016:(In thousands) Foreign currency Defined benefitplans Net UnrealizedGain/loss onDerivatives TotalBalance as of March 28, 2015 $(20,512) $(8,923) $7,711 $(21,724)Other comprehensive (loss) income before reclassifications (1,987) 884 (3,938) (5,041)Amounts reclassified from accumulated other comprehensive loss — 547 (8,822) (8,275)Net current period other comprehensive (loss) income (1,987) 1,431 (12,760) (13,316)Balance as of April 2, 2016 $(22,499) $(7,492) $(5,049) $(35,040)Other comprehensive (loss) income before reclassifications (7,336) 4,851 (364) (2,849)Amounts reclassified from accumulated other comprehensive loss — 369 4,647 5,016Net current period other comprehensive (loss) income (7,336) 5,220 4,283 2,167Balance as of April 1, 2017 $(29,835) $(2,272) $(766) $(32,873)82Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The details about the amount reclassified from accumulated other comprehensive loss for the years ended April 1, 2017 and April 2, 2016 are as follows:(In thousands) Amounts Reclassified from AccumulatedOther Comprehensive Loss Affected Line in theStatement of (Loss) IncomeDerivative instruments reclassified to income statement Year ended April 1,2017 Year ended April 2,2016 Realized net (loss) gain on derivatives $(5,227) $8,654 Net revenues, cost of goods sold, otherexpense, netIncome tax effect 580 168 Provision (benefit) for income taxesNet of taxes $(4,647) $8,822 Pension items reclassified to income statement Realized net loss on pension assets $450 $602 Other expense, netIncome tax effect (81) (55) Provision (benefit) for income taxesNet of taxes $369 $547 83Table of ContentsHAEMONETICS CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)19. SUBSEQUENT EVENTSOn April 27, 2017, we sold our SEBRA sealers product line to Machine Solutions Inc. because it was no longer aligned with our long-term strategicobjectives. In connection with this transaction, we received net proceeds of $9 million. These proceeds are subject to a post-closing adjustment based on finalasset values as determined during the 90 days transition period. The preliminary pre-tax gain expected to be recorded as a result of this transaction is $8million. The SEBRA portfolio includes a suite of products which primarily include radio frequency sealers that are used to seal tubing as part of thecollection of whole blood and blood components, particularly plasma.ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone.ITEM 9A. CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresAs of the end of the period covered by this report, we conducted an evaluation 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 theeffectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15 of the Securities Exchange Act of 1934 (the“Exchange Act”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, due to a material weakness in ourinternal control over financial reporting for inventory described below, our disclosure controls and procedures were not effective as of April 1, 2017.Reports on Internal ControlManagement’s Annual Report on Internal Control over Financial ReportingThe management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is definedin Exchange Act Rules 13a-15(f) and 15d-a5(f). The Company’s internal control system was designed to provide reasonable assurance to the Company’smanagement and Board of Directors regarding the preparation and fair presentation of published financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate.The Company’s management assessed the effectiveness of its internal control over financial reporting as of April 1, 2017. In making this assessment, themanagement used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-IntegratedFramework (2013 framework). Based on our assessment, the Company's management identified a material weakness in our internal control over financialreporting relating to the accounting for inventory. Specifically, we identified a deficiency in the internal controls executed to appropriately account formanufacturing variances in inventory on our consolidated balance sheet and cost of goods sold on our consolidated statements of operations. Managementdetermined that its accounting process for amortizing manufacturing variances to cost of goods sold lacked adequate levels of monitoring and review toappropriately identify and correct errors in the calculation in a timely manner. While reported inventory and related accounts are accurate as of April 1, 2017,this material weakness resulted in an overstatement of net loss in fiscal 2017 and an understatement of net loss in fiscal 2016 and prior periods.We are developing and implementing new control processes and procedures to address this weakness and also to ensure that we become compliant with therequirements of Section 404 of the Sarbanes-Oxley Act of 2002 as required.We are undertaking steps to strengthen our controls over accounting for inventory, including:•Increasing oversight by our management in the calculation and reporting of certain inventory balances;•Enhancing policies and procedures relating to account reconciliation and analysis;•Strengthening communication and information flows between the inventory operations department and the corporate controller's group.The control deficiency described above resulted in certain material and immaterial misstatements in the preliminary financial statement accounts that werecorrected prior to the issuance of the annual consolidated financial statements. The control deficiency create a possibility that a material misstatement to ourconsolidated financial statements will not be prevented or84Table of Contentsdetected on a timely basis, and therefore we concluded that the deficiency represents a material weakness in our internal control over financial reporting andour internal control over financial reporting for inventory is not effective as of April 1, 2017.Our material weakness in controls over accounting for inventory will not be considered remediated until new internal controls are operational for a period oftime and are tested, and management and our independent registered public accounting firm conclude that these controls are operating effectively.Ernst & Young, LLP, an independent registered public accounting firm, has issued an attestation report on the effectiveness of our internal control overfinancial reporting. This report, in which they expressed an adverse opinion, is included below.Changes in Internal ControlsAs disclosed in our 2016 Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q for each of the first three quarters of fiscal 2016, wereported a material weakness in our internal control over financial reporting related to certain aspects of accounting for income taxes; including the existenceof inadequate controls related to processes to record and reconcile income tax accounts, both current and deferred, and procedures with respect toclassification of tax accounts on the consolidated balance sheet.As of April 1, 2017, we have remediated the previously reported material weakness in our internal control over financial reporting related to accounting forincome taxes by implementing the following changes:•We enhanced our processes for analyzing our deferred tax assets and liabilities;•We enhanced our policies and procedures related to both U.S. and non-U.S. tax account reconciliation and analysis, including, but not limited to,increased management oversight in the calculation of certain non-U.S. tax balances, increased automation in the calculation of our tax expense, andincreased communication and direction to non-U.S. information providers;•We hired additional, experienced personnel to augment our existing tax accounting resources and provided extensive training to informationproviders, particularly those outside of the U.S.; and•We increased the level of communication and information flows on significant tax matters between our tax department and the corporate controller’sgroup. We have evaluated and tested the effectiveness of our controls as of April 1, 2017 and determined that our previously reported material weakness in theaccounting for income taxes has been remediated. Other than the remediation efforts described above and the identification of the material weakness in theaccounting for inventory, there have been no changes in our internal control over financial reporting that have materially affected, or are likely to materiallyaffect, our internal control over financial reporting.85Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and Shareholders of Haemonetics CorporationWe have audited Haemonetics Corporation and subsidiaries’ internal control over financial reporting as of April 1, 2017, based on criteria established inInternal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSOcriteria). Haemonetics Corporation and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for itsassessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Controlover Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testingand evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility thata material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following materialweakness has been identified and included in management’s assessment. Management identified a material weakness in internal control over financialreporting relating to the accounting for inventory, stemming from a deficiency in the internal controls executed to appropriately account for manufacturingvariances in inventory on the consolidated balance sheet and cost of goods sold on the consolidated statements of operations. We also have audited, inaccordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of HaemoneticsCorporation and subsidiaries as of April 1, 2017 and April 2, 2016, and the related consolidated statements of (loss) income, comprehensive loss,shareholders' equity and cash flows for each of the three years in the period ended April 1, 2017. This material weakness was considered in determining thenature, timing and extent of audit tests applied in our audit of the 2017 financial statements, and this report does not affect our report dated May 24, 2017,which expressed an unqualified opinion on those financial statements.In our opinion, because of the effect of the material weakness described above on the achievement of the objectives of the control criteria, HaemoneticsCorporation and subsidiaries has not maintained effective internal control over financial reporting as of April 1, 2017, based on the COSO criteria./s/ Ernst & Young LLPBoston, MassachusettsMay 24, 201786Table of ContentsITEM 9B. OTHER INFORMATIONNonePART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCE1. The information called for by Item 401 of Regulations S-K concerning our directors and the information called for by Item 405 of Regulation S-Kconcerning compliance with Section 16(a) of the Securities Exchange Act of 1934 required by this Item is incorporated by reference from our ProxyStatement for the Annual Meeting to be held July 27, 2017.2. The information concerning our Executive Officers is set forth at the end of Part I hereof.3. The balance of the information required by this item, including information concerning our Audit Committee and the Audit Committee FinancialExpert and compliance with Item 407(c)(3) of S-K, is incorporated by reference from the Company’s Proxy Statement for the Annual Meeting to be held July27, 2017. We have adopted a Code of Ethics that applies to our chief executive officer, chief financial officer and senior financial officers. The Code of Ethicsis incorporated into the Company’s Code of Conduct located on the Company’s internet web site at http://phx.corporate-ir.net/phoenix.zhtml?c=72118&p=irol-IRHome and it is available in print to any shareholder who requests it. Such requests should be directed to our Company’s Secretary.We intend to disclose any amendment to, or waiver from, a provision of the Code of Ethics that applies to our chief executive officer, chief financialofficer or senior financial officers and that relates to any element of the Code of Ethics definition enumerated in Item 406 of Regulation S-K by posting suchinformation on our website. Pursuant to NYSE Rule 303A.10, as amended, any waiver of the code of ethics for any executive officer or director must bedisclosed within four business days by a press release, SEC Form 8-K, or internet posting.ITEM 11. EXECUTIVE COMPENSATIONThe information required by this Item is incorporated by reference from our Proxy Statement for the Annual Meeting to be held July 27, 2017.Notwithstanding the foregoing, the Compensation Committee Report included within the Proxy Statement is only being “furnished” hereunder and shall notbe deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSThe information required by this Item is incorporated by reference from the Company’s Proxy Statement for the Annual Meeting to be held July 27, 2017.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPEDENCEThe information required by this Item is incorporated by reference from our Proxy Statement for the Annual Meeting to be held July 27, 2017.ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESThe information required by this Item is incorporated by reference from our Proxy Statement for the Annual Meeting to be held July 27, 2017.87Table of ContentsPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESThe following documents are filed as a part of this report:A)Financial Statements are included in Part II of this reportFinancial Statements required by Item 8 of this Form Report of Independent Registered Public Accounting Firm42Consolidated Statements of (Loss) Income43Consolidated Statements of Comprehensive Loss44Consolidated Balance Sheets45Consolidated Statements of Stockholders’ Equity46Consolidated Statements of Cash Flows47Notes to Consolidated Financial Statements48Schedules required by Article 12 of Regulation S-X II Valuation and Qualifying Accounts93All other schedules have been omitted because they are not applicable or not required.B)Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index beginning at page 91, which is incorporated herein byreference.88Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. HAEMONETICS CORPORATION By: /s/ Christopher Simon Christopher Simon President and Chief Executive OfficerDate : May 24, 2017Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrantand in the capacities and on the dates indicated.Signature Title Date /s/ Christopher Simon President and Chief Executive Officer May 24, 2017Christopher Simon (Principal Executive Officer) /s/ William Burke Chief Financial Officer May 24, 2017William Burke (Principal Financial Officer) /s/ Dan Goldstein Vice President, Corporate Controller May 24, 2017Dan Goldstein (Principal Accounting Officer) /s/ Catherine Burzik Director May 24, 2017Catherine Burzik /s/ Charles Dockendorff Director May 24, 2017Charles Dockendorff /s/ Susan Bartlett Foote Director May 24, 2017Susan Bartlett Foote /s/ Ronald Gelbman Director May 24, 2017Ronald Gelbman /s/ Pedro Granadillo Director May 24, 2017Pedro Granadillo /s/ Mark Kroll Director May 24, 2017Mark Kroll /s/ Richard Meelia Director May 24, 2017Richard Meelia /s/ Ronald Merriman Director May 24, 2017Ronald Merriman 89Table of ContentsEXHIBITS FILED WITH SECURITIES AND EXCHANGE COMMISSIONNumber and Description of Exhibit1. Articles of Organization3A* Amended and Restated Articles of Organization of the Company reflecting Articles of Amendment dated August 23, 1993 and August 21,2006 (filed as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the Quarter ended December 29, 2012 and incorporatedherein by reference).3B* By-Laws of the Company, as amended through January 21, 2015 (filed as Exhibit 99.1 to the Company's Form 8-K dated January 27, 2015). 2. Instruments Defining the Rights of Security Holders4A* Specimen certificate for shares of common stock (filed as Exhibit 4B to the Company's Amendment No. 1 to Form S-1 No. 33-39490 andincorporated herein by reference). 3. Material Contracts10A* Lease dated July 17, 1990 between the Buncher Company and the Company of property in Pittsburgh, Pennsylvania (filed as Exhibit 10-Kto the Company's Form S-1 No. 33-39490 and incorporated herein by reference).10B* First Amendment to lease dated July 17, 1990, made as of July 17, 1996 between Buncher Company and the Company of property inPittsburgh, Pennsylvania (filed as Exhibit 10AI to the Company's Form 10-Q for the quarter ended December 28, 1996 and incorporatedherein by reference).10C* Second Amendment to lease dated July 17, 1990, made as of October 18, 2000 between Buncher Company and the Company for theproperty in Pittsburgh, Pennsylvania (filed as Exhibit 10AG to the Company's Form 10-K for the year ended March 29, 2003 andincorporated herein by reference).10D* Third Amendment to lease dated July 17, 1990, made as of March 23, 2004 between Buncher Company and the Company for the propertyin Pittsburgh, Pennsylvania (filed as Exhibit 10D to the Company's Form 10-K for the year ended March 30, 2013 and incorporated hereinby reference).10E* Fourth Amendment to lease dated July 17, 1990, made as of March 12, 2008 between Buncher Company and the Company for the propertyin Pittsburgh, Pennsylvania (filed as Exhibit 10E to the Company's Form 10-K for the year ended March 30, 2013 and incorporated hereinby reference).10F* Fifth Amendment to lease dated July 17, 1990, made as of October 1, 2008 between Buncher Company and the Company for the property inPittsburgh, Pennsylvania (filed as Exhibit 10F to the Company's Form 10-K for the year ended March 30, 2013 and incorporated herein byreference).10G* Sixth Amendment to lease dated July 17, 1990 made as of January 8, 2010 between Buncher Company and the Company for the property inPittsburgh, Pennsylvania (filed as Exhibit 10G to the Company's Form 10-K for the year ended March 30, 2013 and incorporated herein byreference).10H* Seventh Amendment to lease dated July 17, 1990, made as of March 31, 2011 between Buncher Company and the Company for theproperty in Pittsburgh, Pennsylvania (filed as Exhibit 10H to the Company's Form 10-K for the year ended March 30, 2013 and incorporatedherein by reference).10I* Eighth Amendment to lease dated July 17, 1990, made as of February 26, 2013 between Buncher Company and the Company for theproperty in Pittsburgh, Pennsylvania (filed as Exhibit 10I to the Company's Form 10-K for the year ended March 30, 2013 and incorporatedherein by reference).10J* Lease dated February 21, 2000 between BBVA Bancomer Servicios, S.A., as Trustee of the “Submetropoli de Tijuana” Trust andHaemonetics Mexico Manufacturing, S. de R.L. de C.V., as successor in interest to Ensatec, S.A. de C.V. with authorization of El FloridoCalifornia, S.A. de C.V., for property located in Tijuana, Mexico (filed as Exhibit 10J to the Company's Form 10-K for the year ended March30, 2013 and incorporated herein by reference).10K* Amendment to Lease dated February 21, 2000 made as of July 25, 2008 between BBVA Bancomer Servicios, S.A., as Trustee of the“Submetropoli de Tijuana” Trust Haemonetics Mexico Manufacturing, S. de R.L. de C.V., as successor in interest to Ensatec, S.A. de C.V.,for property located in Tijuana, Mexico (filed as Exhibit 10K to the Company's Form 10-K for the year ended March 30, 2013 andincorporated herein by reference).10L* Extension to Lease dated February 21, 2000, made as of August 14, 2011 between PROCADEF 1, S.A.P.I. de C.V. and Haemonetics MexicoManufacturing, S. de R.L. de C.V., as successor in interest to Ensatec, S.A. de C.V., for property located in Tijuana, Mexico (Spanish toEnglish translation filed as Exhibit 10L to the Company's Form 10-K for the year ended March 30, 2013 and incorporated herein byreference).90Table of Contents10M* Amendment Letter to Lease dated February 21, 2000, made as of August 14, 2011 between BBVA Bancomer Servicios, S.A., as Trustee ofthe “Submetropoli de Tijuana” Trust and Haemonetics Mexico Manufacturing, S. de R.L. de C.V., as successor in interest to Ensatec, S.A. deC.V., for property located in Tijuana, Mexico (filed as Exhibit 10M to the Company's Form 10-K for the year ended March 30, 2013 andincorporated herein by reference).10N* Notice of Assignment to Lease dated February 21, 2000, made as of February 23, 2012 between BBVA Bancomer Servicios, S.A., as Trusteeof the “Submetropoli de Tijuana” Trust and Haemonetics Mexico Manufacturing, S. de R.L. de C.V., as successor in interest to Ensatec, S.A.de C.V. for property located in Tijuana, Mexico (Spanish to English translation filed as Exhibit 10N to the Company's Form 10-K for theyear ended March 30, 2013 and incorporated herein by reference).10O* Lease Agreement effective December 3, 2007 between Mrs. Blanca Estela Colunga Santelices, by her own right, and Pall Life SciencesMexico, S.de R.L. de C.V., for the property located in Tijuana, Mexico (Spanish to English translation filed as Exhibit 10W to theCompany's Form 10-K for the year ended March 30, 2013 and incorporated herein by reference).10P* Assignment to Lease Agreement effective December 3, 2007, made as of December 2, 2011 between Mrs. Blanca Estela Colunga Santelices,by her own right, Pall Life Sciences Mexico, S.de R.L. de C.V., (“Assignor”) and Haemonetics Mexico Manufacturing, S. de R.L. de C.V.assuccessor in interest to Pall Mexico Manufacturing S. de R.L. de C.V., (“Assignee”) assigned in favor of the property located in Tijuana,Mexico (filed as Exhibit 10X to the Company's Form 10-K for the year ended March 30, 2013 and incorporated herein by reference).10Q* Sublease Contract to Lease Agreement effective December 3, 2007, made as of December 3, 2011 between Haemonetics MexicoManufacturing, S. de R.L. de C.V. as successor in interest to Pall Mexico Manufacturing, S.de R.L. de C.V., and Pall Life Sciences Mexico,S. de R.L. de C.V., for the property located in Tijuana, Mexico (filed as Exhibit 10Y to the Company's Form 10-K for the year endedMarch 30, 2013 and incorporated herein by reference).10R* Sublease Contract to Lease Agreement effective December 3, 2007, made as of February 23, 2012 between Haemonetics MexicoManufacturing, S. de R.L. de C.V. as successor in interest to Pall Mexico Manufacturing S. de R.L. de C.V. and Ensatec, S.A. de C.V., for theproperty located in Tijuana, Mexico (filed as Exhibit 10Z to the Company's Form 10-K for the year ended March 30, 2013 and incorporatedherein by reference).10S* Lease dated August 20, 2009 between Price Logistics Center Draper One, LLC and the Company for property located in Draper, Utah. (filedas Exhibit 10AA to the Company's Form 10-K for the year ended March 30, 2013 and incorporated herein by reference).10T* Lease dated September 19, 2013 between the Penang Development Corporation ("Lessor") and Haemonetics Malaysia Sdn Bhd ("Lessee") ofthe property located in Penang, Malaysia (filed as Exhibit 10D to the Company's 10-Q for the quarter ended June 28, 2014 and incorporatedherein by reference).10U*† Haemonetics Corporation 2005 Long-Term Incentive Compensation Plan, reflecting amendments dated July 31, 2008, July 29, 2009, July21, 2011, November 30, 2012, July 24, 2013, January 21, 2014, and July 23, 2014 (filed as Exhibit 10.1 to the Company's Form 8-K datedJuly 25, 2014 and incorporated herein by reference).10V*† Form of Option Agreement for Non-Qualified stock options for the 2005 Long Term-Incentive Compensation Plan for Non-employeeDirectors (filed as Exhibit 10.1 to the Company's Form 10-Q for the quarter ended October 1, 2005 and incorporated herein by reference).10W*† Form of Option Agreement for Non-Qualified stock options for the 2005 Long-Term Incentive Compensation Plan for Employees. (filed asExhibit 10S to the Company's Form 10-K for the fiscal year ended March 30, 2010 and incorporated herein by reference).10X*† Form of Restricted Stock Agreement with Employees under 2005 Long-Term Incentive Compensation Plan (filed as Exhibit 10U to theCompany's Form 10-K for the year ended April 3, 2010 and incorporated herein by reference).10Y*† Form of Change in Control Agreement (filed as Exhibit 10AK to the Company's Form 10-K, for the year-ended March 31, 2013 andincorporated herein by reference).10Z*† Amended and Restated 2007 Employee Stock Purchase Plan (as amended and restated on July 21, 2016 incorporated as Exhibit 10.2 to theCompany’s Form 10-Q, for the quarter ended July 2, 2016 and incorporated herein by reference).10AA*† Amended and Restated Non-Qualified Deferred Compensation Plan as amended and restated on July 24, 2013 (filed as Exhibit 10.2 to theCompany's Form 8-K dated July 26, 2013 and incorporated herein by reference).10AB*† Form of Executive Severance Agreement (filed as Exhibit 10.2 to the Company’s Form 8-K dated January 19, 2016 and incorporated hereinby reference).10AC*† Employment Agreement effective as of May 16, 2016 between the Company and Christopher Simon (filed as Exhibit 10.1 to the Company’sForm 8-K dated May 10, 2016 and incorporated herein by reference).10AD*† Executive Severance Agreement effective as of May 16, 2016 between the Company and Christopher Simon (filed as Exhibit 10.2 to theCompany’s Form 8-K dated May 10, 2016 and incorporated herein by reference).91Table of Contents10AE*† Change in Control Agreement effective as of May 16, 2016 between the Company and Christopher Simon (filed as Exhibit 10.3 to theCompany’s Form 8-K dated May 10, 2016 and incorporated herein by reference).10AF*† Haemonetics Corporation Worldwide Executive Bonus Plan with an Effective Date of April 3, 2016 (filed as Exhibit 10.3 to the Company’sForm 10-Q for the quarter ended July 2, 2016 and incorporated herein by reference).10AG*† Performance Share Unit Agreement between Haemonetics Corporation and Christopher Simon dated as of June 29, 2016 (filed as Exhibit10.1 to the Company’s Form 10-Q for the quarter ended July 2, 2016 and incorporated herein by reference).10AH† Agreement and General Release between Haemonetics Corporation and Byron Selman dated May 1, 2017.10AI* Asset Purchase Agreement, dated as of April 28, 2012, by and between Haemonetics Corporation and Pall Corporation (filed as Exhibit 10Zto the Company's Form 10-K for the fiscal year ended March 31, 2012 and incorporated herein by reference).10AJ* Credit Agreement dated as of June 30, 2014 among Haemonetics Corporation and the Lenders listed therein and JPMorgan Chase Bank,N.A. as Administrative Agent (filed as Exhibit 10.1 to the Company’s Form 8-K dated July 7, 2014 and incorporated herein by reference). 4. Subsidiary Certifications and Consents21.1 Subsidiaries of the Company.23.1 Consent of the Independent Registered Public Accounting Firm.31.1 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002, of Christopher Simon, President and Chief Executive Officer of theCompany.31.2 Certification pursuant to Section 302 of Sarbanes-Oxley of 2002 of William Burke, Executive Vice President, Chief Financial Officer of theCompany.32.1 Certification Pursuant to 18 United States Code Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, ofChristopher 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, ofWilliam Burke, Executive Vice President, Chief Financial Officer of the Company.101ˆ The following materials from Haemonetics Corporation on Form 10-K for the year ended April 1, 2017, formatted in Extensive BusinessReporting Language (XBRL): (i) Consolidated Statements of (Loss) Income, (ii) Consolidated Statements of Comprehensive (Loss) Income,(iii) Consolidated Balance Sheets, (iv) Consolidated Statement of Stockholders' Equity, (v) Consolidated Statements of Cash Flows, and(vi) Notes to Consolidated Financial Statements, tagged as blocks of text.*Incorporated by reference†Agreement, plan, or arrangement related to the compensation of officers or directors‡Subject to a confidential treatment requestˆIn accordance with Rule 406T of Regulation S-T, the XBRL-related information in Exhibit 101 to this Form 10-K is deemed not filed or part of aregistration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, is deemed not filed for purposes of section 18 of the ExchangeAct, and otherwise is not subject to liability under these sections.92Table of ContentsSCHEDULE IIHAEMONETICS CORPORATIONVALUATION AND QUALIFYING ACCOUNTS(In thousands)Balance atBeginning ofFiscal Year Charged toCosts andExpenses Write-Offs(Net of Recoveries) Balance at Endof Fiscal YearFor Year Ended April 1, 2017 Allowance for Doubtful Accounts$2,253 $103 $172 $2,184For Year Ended April 2, 2016 Allowance for Doubtful Accounts$1,749 $728 $(224) $2,253For Year Ended March 28, 2015 Allowance for Doubtful Accounts$1,676 $399 $(326) $1,74993AGREEMENT AND GENERAL RELEASEThis Separation Agreement (“Agreement”) is made and entered into by and between Haemonetics Corporation (the“Company”) and Byron Selman (the “Executive”), and his heirs, executors, administrators, personal representatives, agents,successors, and assigns, and shall be effective as of the date of the Executive’s execution of this Agreement (the “Effective Date”).1.Resignation; Last Day of Employment. Executive's last day of employment with the Company willbe May 5, 2017 (“Separation Date”). Executive hereby resigns effective as of the Separation Date from any office held by theExecutive with the Company or its subsidiaries. The Executive shall remain an employee of the Company from the Effective Datethrough and including the Separation Date. Executive acknowledges that the Company has paid or will pay Executive all accruedwages through that date, including any accrued unused vacation, and has refunded or will refund any accumulated contributions to theCompany’s Employee Stock Purchase Plan for the current offering period, where applicable and appropriate as of the Separation Date,whether or not Executive signs this Agreement. Executive acknowledges and agrees that his accrued but unused vacation as of March1, 2017 is $14,980. Except as set forth herein, Executive’s participation in the Company’s 401(k) plan and other employee benefitsprograms will cease as of the Separation Date. The Executive agrees that he is not entitled to any other salary, bonus, equity or othercompensation from the Company except as expressly set forth herein.2. Consideration. If Executive signs this Agreement no later than May 3, 2017 and does not revoke it and complieswith its terms, and Executive signs the Bring Down Release described in Section 5(e) below no earlier than the Separation Date and nolater than 21 days after the date Executive executes this Agreement and does not revoke it, the Company agrees:a. To pay Executive as severance pay an amount equal to $458,260 (representing one year of the Executive’scurrent gross salary) (“Severance Pay”). The Company will withhold from this Severance Pay taxes and other authorized deductions,including advances or other amounts due to the Company from Executive. The Company will pay the Severance Pay over a twelve(12) month period in approximately equal bi-weekly installments in accordance with the Company’s regular payroll practices. The firstinstallment shall be made as part of the Company’s next regular payroll cycle that is at least eight (8) days after the Company hasreceived from Executive both (i) a copy of this Agreement signed by Executive, provided Executive has not revoked this Agreementwithin the time allowed to revoke set forth below, and (ii) a copy of the Bring Down Release signed by the Executive, providedExecutive has not revoked the Bring Down Release within the time allowed to revoke set forth below;b. To pay Executive $15,500 in a single payment within thirty (30) days after the Separation Date to cover theapproximate cost of the Company’s portion of the premiums necessary to continue medical, dental, life insurance and disabilityinsurance coverages in effect on the Separation Date for one year. Executive is entitled to elect to continue medical and dentalcoverage under the Company’s plans under the continuation requirements of COBRA coverage (as defined below) on an after-taxbasis, and to the extent required by law may elect to convert any coverage under any life or disability plan in accordance with the termsof the applicable insurance policy, in each case at Executive’s own expense;17610366c. To provide Executive with executive outplacement services on a one-to-one basis from Lee Hecht Harrisonfor up to one year after the Separation Date. If Executive does not begin to use such services within thirty (30) days of the SeparationDate, Company has no obligation to pay for such services. Company shall not provide a cash payment in lieu of the use of suchservices; andd. To pay Executive within 90 days of the Separation Date the product of $229,130 (representing 100% of theExecutive’s target bonus level for the Company’s 2017 fiscal year) multiplied by the Company’s 2017 fiscal year bonus fundingpercentage under the Company’s Worldwide Executive Bonus Plan (which will be determined by the Compensation Committee of theCompany’s Board of Directors) in satisfaction of the Executive’s bonus payment for the Company’s 2017 fiscal year.3. No Consideration Absent Execution of this Agreement. Executive understands and agrees that the Company hasno obligation to pay the consideration specified in Section 2 unless Executive executes this Agreement and the Bring Down Release,complies with the terms of this Agreement and does not revoke any portion of this Agreement. Executive acknowledges that themonies and benefits offered are valid and adequate consideration for the Executive’s commitments.4. Equity Treatment. Set forth on Exhibit A to this Agreement is a list of all outstanding equity awards held by theExecutive with respect to shares of the Company’s common stock. Other than as set forth on Exhibit A, neither the Company nor anysubsidiary has any obligation otherwise to issue to the Executive any equity award for or shares of capital stock of the Company or anysubsidiary. For the avoidance of doubt, (a) the equity awards listed on Exhibit A shall continue to vest through the Separation Dateaccording to the terms of the applicable award agreements and the Company’s 2005 Long-Term Incentive Compensation Plan, (b) theExecutive’s termination of employment does not constitute a “qualifying retirement” for purposes of all outstanding stock option,market stock unit or performance share unit awards, and (c) any outstanding stock option awards shall remain exercisable as specifiedin the applicable option agreement.5. General Release, Claims Not Released and Related Provisions.a. General Release of All Claims. Executive knowingly and voluntarily releases and forever discharges theCompany, its parent corporation, affiliates, subsidiaries, divisions, predecessors, insurers, successors and assigns, and their current andformer employees, officers, directors, attorneys and agents thereof, both individually and in their business capacities, and theiremployee benefit plans and programs and their administrators and fiduciaries (collectively referred to throughout the remainder of thisAgreement as “Releasees”), of and from any and all causes of action, claims and liabilities, known and unknown, asserted orunasserted, that the Executive has or may have against Releasees as of the date of Executive’s execution of this Agreement, including,but not limited to, any alleged violation of:▪Title VII of the Civil Rights Act of 1964;▪Sections 1981 through 1988 of Title 42 of the United States Code;▪The Employee Retirement Income Security Act of 1974 (as modified below in Section 5b. and Section 6 withrespect to the Company’s 401(k) plan);▪The Immigration Reform and Control Act;▪The Americans with Disabilities Act of 1990;27610366▪The Age Discrimination in Employment Act of 1967;▪The Worker Adjustment and Retraining Notification Act;▪The Fair Credit Reporting Act;▪The Family and Medical Leave Act;▪The Equal Pay Act;▪The Genetic Information Nondiscrimination Act of 2008;▪The Massachusetts Plant Closing Laws, M.G.L. c. 151A, § 71A, as amended;▪The Massachusetts Fair Employment Practices Act, M.G.L c. 151B, as amended;▪The Massachusetts Occupational Safety and Health Laws;▪The Massachusetts Equal Rights Act, M.G.L. c. 93, § 102, as amended;▪The Massachusetts Equal Pay Act, M.G.L. c. 149, § 105A-C, as amended;▪The Massachusetts Maternity Leave Act, M.G.L. c. 149, § 105D, as amended;▪Laws relating to unpaid wages or other compensation, including but not limited to those under TheMassachusetts Payment of Wages Law, M.G.L. c. 149, § 148 et seq., as amended;▪The Massachusetts Equal Rights for the Elderly and Disabled Law, M.G.L. c. 93, § 103, as amended;▪The Massachusetts AIDS Testing Law, M.G.L. c. 111, § 70F, as amended;▪The Massachusetts Civil Rights Act, M.G.L. c. 12, 11H & I, as amended;▪The Massachusetts Privacy Law, M.G.L. c. 214, § 1B, as amended;▪The Massachusetts Sexual Harassment Statute, M.G.L. c. 214, § 1C, as amended;▪The Massachusetts Consumer Protection Act, M.G.L. c. 93A, as amended;▪The Massachusetts Small Necessities Leave Act, M.G.L. c. 149, § 52D, as amended;▪Any other federal, state or local law, rule, regulation, or ordinance;▪Any public policy, contract, tort, or common law; or▪Any claim for costs, fees, or other expenses including attorneys' fees incurred in these matters.b. Claims Not Released. Executive is not waiving any rights he may have to: (a) his own vested accruedemployee benefits under the Company’s health, welfare, or retirement benefit plans (including the Company’s 401(k) plan) as of thedate of Executive’s execution of this Agreement, including any rights to continue group health plan coverage under the ConsolidatedOmnibus Budget Reconciliation Act of 1986, as amended (“COBRA”); (b) benefits and/or the right to seek benefits under applicableworkers’ compensation and/or unemployment compensation statutes; (c) pursue claims which by law cannot be waived by signing thisAgreement; (d) enforce this Agreement; (e) challenge the validity of this Agreement; or (f) any rights to be indemnified by theCompany pursuant to the Company’s Articles of Organization or bylaws and any rights under the Company’s applicable directors andofficers insurance policy.c. Governmental Agencies. Nothing in this Agreement prohibits or prevents Executive from filing a chargewith or participating, testifying, or assisting in any investigation, hearing,37610366or other proceeding before any federal, state, or local government agency. However, to the maximum extent permitted by law,Executive agrees that if such an administrative claim is made, Executive shall not be entitled to recover any individual monetary reliefor other individual remedies.d. Collective/Class Action Waiver. If any claim is not subject to release, to the extent permitted by law,Executive waives any right or ability to be a class or collective action representative or to otherwise participate in any putative orcertified class, collective or multi-party action or proceeding based on such a claim in which the Company or any other Releaseeidentified in this Agreement is a party.e. As a further condition to receiving the payments and benefits described in Section 2 above, Executive agreesto sign a bring-down release in the form attached as Exhibit B to this Agreement (the “Bring Down Release”) no earlier than theSeparation Date and no later than 21 days after the date Executive executes this Agreement and not to revoke the Bring DownRelease.6. Acknowledgments and Affirmations.a. Executive affirms that Executive has not filed, caused to be filed, or presently is a party to any claim againstthe Company. Executive also affirms that Executive has reported all hours worked as of the date Executive signs this Agreement andhas been paid and/or has received all compensation, wages, bonuses, commissions, and/or benefits which are due and payable as of thedate Executive signs this Agreement (except for the payment of accrued but unpaid vacation set forth in Section 1, COBRAcontinuation coverage, his accrued and vested benefits under the Company’s 401(k) plan, and his vested rights under outstandingequity awards set forth on Exhibit A). Executive affirms that Executive has been granted any leave to which Executive was entitledunder the Family and Medical Leave Act or related state or local leave or disability accommodation laws.b. Executive further affirms that Executive has no known workplace injuries or occupational diseases that havenot been reported to the Company in writing or adjudicated. Executive also affirms that Executive has not divulged any proprietary orconfidential information of the Company and will continue to maintain the confidentiality of such information consistent with theCompany’s policies and Executive’s agreement(s) with the Company and/or common law.c. Executive further affirms that Executive has not been retaliated against for reporting any allegations ofwrongdoing by the Company or its officers, including any allegations of corporate fraud. Executive affirms that all of the Company’sdecisions regarding Executive's pay and benefits through the date of Executive's execution of this Agreement were not discriminatorybased on age, disability, race, color, sex, religion, national origin or any other classification protected by law.d. The Company affirms that it is currently not aware of any claims that it or its subsidiaries, predecessors orassigns have against Executive.7. Waiver of ADEA Claims. Executive agrees that by signing this Agreement, Executive waives any claims he mayhave under the Age Discrimination in Employment Act of 1967 (the47610366“ADEA”). Executive agrees this waiver is knowing and voluntary. Executive and the Company agree this waiver does not apply toADEA claims or rights that might arise after Executive signs this Agreement. Executive also agrees Executive has no right to theSeverance Pay or the other amounts or benefits described in Section 2 unless Executive signs this Agreement. Executive also agreesthat this Agreement advises Executive in writing that:▪Executive should consult with an attorney before signing this Agreement;▪Executive has up to 21 calendar days to consider whether to sign this Agreement, starting from the dateExecutive receives this Agreement;▪Executive has 7 days after signing this Agreement to revoke it;▪If Executive revokes this Agreement Executive will not receive the Severance Pay or the other amounts orbenefits described in Section 2; and▪This Agreement does not prevent Executive from later challenging the validity of the Agreement or from filing acharge with any government agency.8. Professional Transition. The Executive agrees to cooperate with and assist the Company in a responsible, positiveand professional manner with respect to the transition of his employment duties and responsibilities. The Executive acknowledges thatthe Company’s obligations under this Agreement are expressly contingent on such cooperation and assistance, and on the Executivedealing with any issues relating to his employment with or separation from the Company in a similarly responsible, positive andprofessional manner.9. Confidential Information. The Executive agrees that during the Executive’s employment with the Company,whether or not under this Agreement, and at all times thereafter:a. The Executive will not at any time, directly or indirectly, disclose or divulge any Confidential Information(as hereinafter defined), except as requested in writing by the Company, and except to the extent required by law, subpoena or courtorder (but only after the Executive has provided the Company with reasonable notice and opportunity to take action against any legallyrequired disclosure). As used herein, “Confidential Information” means all trade secrets and all other information of a business,financial, marketing, technical or other nature relating to the business of the Company including, without limitation, any customer orvendor lists, financial statements and projections, know-how, pricing policies, operational methods, methods of doing business,technical processes, formulae, designs and design projects, inventions, computer hardware, software programs, business plans andprojects pertaining to the Company and including any information of others that the Company has agreed to keep confidential;provided, that Confidential Information shall not include any information that has entered or enters the public domain through no faultof the Executive.b. The Executive shall make no use whatsoever, directly or indirectly, of any Confidential Information at anytime.57610366c. Upon the Company’s request at any time and for any reason, the Executive shall immediately deliver to theCompany all materials (including all soft and hard copies) in the Executive’s possession that contain or relate to ConfidentialInformation and all other Company documents and property.d. All Developments made by the Executive, either alone or in conjunction with others, at any time or at anyplace during the Executive’s employment with the Company, whether or not reduced to writing or practice during such period ofemployment, shall be and hereby are the exclusive property of the Company without any further compensation to the Executive. Inaddition, without limiting the generality of the prior sentence, all Developments which are copyrightable work by the Executive areintended to be “work made for hire” as defined in Section 101 of the Copyright Act of 1976, as amended, and shall be and hereby arethe property of the Company. “Developments” means any and all inventions, modifications, discoveries, designs, developments,improvements, processes, software programs, works of authorship, documentation, formulae, data, techniques, know-how, secrets orintellectual property rights or any interest therein that (i) relate to the business in which the Company is engaged or in which theCompany intended to engage in during Executive’s employment with the Company, (ii) are or were created or improved in whole or inpart by using any Company resources, data, facilities or equipment, or (iii) are or were created or improved within the scope ofExecutive’s employment.e. The Executive has promptly disclosed any Developments to the Company. If any Development is not theproperty of the Company by operation of law, this Agreement or otherwise, the Executive will, and hereby does, assign to theCompany all right, title and interest in such Development, without further consideration, and will assist the Company and its nomineesin every way, at the Company’s expense, to secure, maintain and defend the Company’s rights in such Development. The Executiveshall sign all instruments necessary for the filing and prosecution of any applications for, or extension or renewals of, letters patent (orother intellectual property registrations or filings) of the United States or any foreign country which the Company desires to file andrelates to any Development. The Executive hereby irrevocably designates and appoints the Company and its duly authorized officersand agents as such Executive’s agent and attorney-in-fact (which designation and appointment shall be deemed coupled with aninterest and shall survive the Executive’s death or incapacity), to act for and in the Executive’s behalf to execute and file any suchapplications, extensions or renewals and to do all other lawfully permitted acts to further the prosecution and issuance of such letterspatent, other intellectual property registrations or filings or such other similar documents with the same legal force and effect as ifexecuted by the Executive. Executive waives all claims to moral rights in the Developments.10. Restrictive Covenants. The Executive acknowledges that (i) the services performed by the Executive whileemployed by the Company were of a special, unique, unusual, extraordinary, and intellectual character, and (ii) the provisions of thisSection 10 are reasonable and necessary to protect the Company’s business, goodwill and Confidential Information. The Executivetherefore agrees that for a period of one year after the Separation Date:a. the Executive will not, directly or indirectly, individually or as a consultant to, or an employee, officer,director, manager, stockholder, partner, member, investor, lender or other owner or participant in any business entity, other than theCompany, engage in or assist any other person or entity to engage in any business which competes with any business in which theCompany is engaging or in which the Company planned to engage as of the Separation Date, anywhere in the United States oranywhere else67610366in the world where the Company does business or planned to do business during the Executive’s employment;b. the Executive will not, directly or indirectly, (i) solicit, divert or take away, or attempt to solicit, divert ortake away, the business or relationship of the Company with any of its customers, clients, distributors, dealers, referral sources,business partners, suppliers, vendors, service providers, consultants, lenders, investors, landlords, licensors or attorneys or any otherperson or entity with whom the Company does business (collectively, “Business Partners”), or (ii) otherwise interfere with theCompany’s business relationship with any of its Business Partners;c. the Executive will not, directly or indirectly, solicit, recruit, hire or engage, or otherwise interfere with thebusiness relationship of the Company with, any current or former Executive of the Company, other than any person who ceased to beemployed by the Company for a period of at least twelve (12) months; andd. the Executive will give notice to the Company of each new business activity Executive plans to undertake,no later than ten (10) business days after beginning any such activity. The notice shall state the name and address of the person,corporation, association or other entity or organization (each, an “Entity”) for whom such activity is undertaken and the nature ofExecutive’s business relationship or position with the Entity. Executive further agrees to provide the Company with other pertinentinformation concerning such business activity as the Company may reasonably request in order to determine Executive’s continuedcompliance with his obligations under this Agreement. However, in all cases, the Executive’s obligation to notify the Company shallbe limited to information that is public and non-confidential and that subsequently becomes public and non-confidential during the oneyear following the termination of his employment Executive consents to notification by the Company to the Executive’s new employeror its agents regarding the Executive’s rights and obligations under this Agreement or any other agreement or understanding with theCompany; ande. the Executive will not, directly or indirectly, assist any person or entity in performing any activity prohibitedby Sections 10a., 10b., or 10c.11. Non-Disparagement. At all times on and after the Separation Date the Executive will not, directly or indirectly,make any disparaging statements, written or oral, about the Company or any of its directors, officers, Executives, stockholders,investors, lenders, affiliates, managers, members, partners, agents, attorneys or representatives. This Section shall not prohibit theExecutive from engaging in the activities permitted under Section 5c. above.12. Litigation Cooperation. The Executive agrees to cooperate fully with the Company in the defense or prosecutionof any claims, arbitration or regulatory proceedings or action which already have been brought or which may be brought in the futureagainst or on behalf of the Company or any of its directors, officers, employees, or agents which relate to events or occurrences thattranspired during his employment with the Company. The Executive’s full cooperation in connection with such claims or actions shallinclude, without implication of limitation, being available to meet with counsel to prepare for discovery or trial and to testify truthfullyas a witness when reasonably requested by the Company at reasonable times designated in good faith by the Company. The Executiveagrees that he will not voluntarily disclose any information to any person or party that is adverse to the Company and he will maintainthe confidences77610366and privileges of the Company. The Company agrees to reimburse the Executive for any reasonable out-of-pocket expenses that theExecutive incurs in connection with such cooperation, subject to reasonable documentation. The Company will try, in good faith, toexercise its rights under this Section so as not to unreasonably interfere with the Executive’s ability to engage in gainful employment.13. Limited Disclosure and Return of Property. Executive agrees not to disclose the substance of this Agreement,except to Executive’s spouse, tax advisor, an attorney with whom Executive chooses to consult regarding Executive’s consideration ofthis Agreement, and/or to any federal, state or local government agency. Executive understands and acknowledges this confidentialityrequirement constitutes an essential and material part of this Agreement, and that the Company and Releasees would not enter into thisAgreement without Executive’s promise to maintain it in confidence.Executive affirms that Executive has returned all of the Company’s property, documents, or any confidentialinformation in Executive’s possession or control. Executive also affirms that Executive is in possession of all of Executive’s propertythat Executive had at Company’s premises and that the Company is not in possession of any of Executive’s property.14. Effect of Breach. The Executive recognizes and agrees that the compensation and benefits offered to himhereunder are in consideration for the Executive’s full and complete compliance with the covenants and provisions of this Agreement.Accordingly, the Executive agrees that if he violates this Agreement, including but not limited to the terms of Sections 8 through 13,the Company may immediately terminate payment of further compensation or benefits otherwise owed to the Executive hereunder, andmay recover the full value of any such compensation and benefits already provided to the Executive to the maximum extent permittedby law. Executive acknowledges that a breach of any of the covenants continued in Sections 8 through 13 of this Agreement couldresult in irreparable injury to the Company for which there might be no adequate remedy at law, and that, in the event of such a breachor threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or preliminary injunction and a permanentinjunction restraining Executive from engaging in any activities prohibited by Sections 8 through 13 herein or such other equitablerelief as may be required to enforce specifically any covenants of Sections 8 through 13. In the event of such a breach, the Companyshall be entitled to recover from Executive all reasonable attorneys’ fees and costs incurred by it in connection with such breach.Additionally, if Executive violates Section 10 of this Agreement, the temporal period applicable to that Section shall be extended bythe period of time during which such violation occurred. Any event of a breach by the Executive will not affect the release set forth inSection 5 above or the Executive’s continuing obligations under this Agreement.15. Tax Withholding; Section 409A.a. All payments made by the Company to Executive or the Executive’s dependents, beneficiaries or estate willbe subject to the withholding of such amounts relating to tax and/or other payroll deductions as may be required by law.b. The parties intend that the benefits and payments provided under this Agreement shall be exempt from, orcomply with, the requirements of Section 409A of the Internal Revenue Code (the “Code”). Notwithstanding the foregoing, theCompany shall in no event be obligated to indemnify the Executive for any taxes or interest that may be assessed by the InternalRevenue Service pursuant to87610366Section 409A of the Code. Each payment or installment under this Agreement is intended to be a “separate payment for purposes ofSection 409A.16. Governing Law and Interpretation. This Agreement shall be governed and conformed in accordance with thelaws of the Commonwealth of Massachusetts without regard to its conflict of laws provision. In the event of a breach of any provisionof this Agreement, either party may institute an action specifically to enforce any term or terms of this Agreement and/or to seek anydamages for breach. Should any provision of this Agreement be declared illegal or unenforceable by any court of competentjurisdiction and cannot be modified to be enforceable, excluding the general release language, such provision shall immediatelybecome null and void, leaving the remainder of this Agreement in full force and effect.17. Nonadmission of Wrongdoing. The parties agree that neither this Agreement nor the furnishing of theconsideration for this Agreement shall be deemed or construed at any time for any purpose as an admission by Releasees ofwrongdoing or evidence of any liability or unlawful conduct of any kind.18. No Mitigation. The Executive is not required to seek other employment after the Separation Date or to attempt inany way to reduce amounts payable to the Executive by the Company under Section 2 of this Agreement. Further, the amount of anypayment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Executive following theSeparation Date as a result of employment by another employer.19. Amendment. This Agreement may not be modified, altered or changed except in writing and signed by bothparties wherein specific reference is made to this Agreement.20. Entire Agreement. This Agreement and General Release (including its Exhibits) is the entire agreement betweenExecutive and the Company regarding his termination of employment with the Company, and supersedes and replaces any otheragreements, including the Executive Severance Agreement effective January 15, 2016 and the Change-in-Control Agreement datedApril 27, 2015. Executive acknowledges that Executive has not relied on any representations, promises, or agreements of any kindmade to Executive in connection with Executive’s decision to accept this Agreement and General Release, except for those set forth inthis Agreement and General Release.21. Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, butall of which together will constitute one and the same instrument.EXECUTIVE IS ADVISED THAT EXECUTIVE HAS UP TO TWENTY-ONE (21) CALENDAR DAYSTO CONSIDER THIS AGREEMENT AND GENERAL RELEASE IN WHICH YOU WAIVE IMPORTANT RIGHTS,INCLUDING THOSE UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967. EXECUTIVE ALSOIS ADVISED TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS AGREEMENT AND GENERALRELEASE CONCERNING THE RIGHTS BEING WAIVED AS WELL AS ALL OTHER TERMS OF THISAGREEMENT AND GENERAL RELEASE.97610366THE SIGNED AGREEMENT MUST BE RETURNED TO: MARY JANE WILLIAMS, VICEPRESIDENT, GLOBAL TOTAL REWARDS, HAEMONETICS, CORP., 400 WOOD ROAD, BRAINTREE MA, 02184EXECUTIVE MAY REVOKE THIS AGREEMENT AND GENERAL RELEASE FOR A PERIOD OFSEVEN (7) CALENDAR DAYS FOLLOWING THE DAY EXECUTIVE SIGNS THIS AGREEMENT. ANYREVOCATION WITHIN THIS PERIOD MUST BE SUBMITTED, IN WRITING, TO MARY JANE WILLIAMS, VICEPRESIDENT, GLOBAL TOTAL REWARDS, AND STATE, "I HEREBY REVOKE MY ACCEPTANCE OF OURAGREEMENT AND GENERAL RELEASE." THE REVOCATION MUST BE PERSONALLY DELIVERED ORMAILED TO MARY JANE WILLIAMS, VICE PRESIDENT, GLOBAL TOTAL REWARDS HAEMONETICS CORP.,400 WOOD ROAD, BRAINTREE, MA, IF MAILED IT MUST BE POSTMARKED WITHIN SEVEN (7) CALENDARDAYS AFTER EXECUTIVE SIGNS THIS AGREEMENT. EXECUTIVE AGREES THAT ANY MODIFICATIONS,MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT AND GENERAL RELEASE DO NOT RESTART ORAFFECT IN ANY MANNER THE ORIGINAL UP TO TWENTY-ONE (21) CALENDAR DAY CONSIDERATIONPERIOD.EXECUTIVE VOLUNTARILY, FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION,ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE INTENDING TO WAIVE, SETTLE AND RELEASEALL CLAIMS, INCLUDING ADEA CLAIMS, EXECUTIVE HAS OR MIGHT HAVE AGAINST THE COMPANYAND ANY RELATED PERSONS OR ENTITIES.[Signature page follows]107610366The parties knowingly and voluntarily sign this Agreement and General Release as of the date(s) set forth below:Byron Selman Haemonetics Corporation_/s/ Byron Selman ______ By: /s/ Christopher A. Simon Name: Christopher Simon Title: President & CEO Date: May 1, 2017 Date: May 1, 2017 117610366Exhibit A Restricted Stock Unit Inventory Grant DateRSUs Granted (#)RSUs Vested (#)RSUs Unvested (#)Unvested Value (B) 10/25/20163,83603,836$152,108.59 1/13/20168,1388,1380$0.00 10/20/20153,9099772,932$116,262.35 10/22/20142,3381,1701,168$46,314.61 10/23/20131,8001,350450$17,843.81 10/24/20122,4342,4340$0.00 Total22,45514,0698,386$332,529.36 Performance-Based Stock Unit Inventory Grant DateMSUs/PSUs Granted (#)MSUs/PSUs Vested (#)MSUs/PSUs Unvested (#)Unvested Value (C) 10/25/20167,67307,673$304,256.83 10/20/20157,81907,819$310,046.16PSU4/27/20156,55006,550$259,726.60MSU10/22/20144,67604,676$185,417.04PSU7/24/201312,500012,500$495,661.46MSUTotal39,218039,218$1,555,108.09 Stock Option Inventory Grant DateOptionsGranted (#)OutstandingOptions Vested(#)OutstandingOptionsUnvested(#)OutstandingOptionsStrikePriceVested Value(D)UnvestedValue (E)OutstandingValueExpirationDate of Option10/25/201616,551—16,55116,511$34.21$0.00$90,085.71$90,085.7110/25/202310/20/201517,1864,29612,89017,186$31.97$33,005.81$99,032.80$132,038.6110/20/202210/22/201410,3765,1885,18810,376$34.75$25,462.27$25,462.27$50,924.5410/22/202110/23/201316,77812,5834,19516,778$41.66$0.00$0.00$0.0010/23/202010/24/201222,67622,676—22,676$39.06$13,558.36$0.00$13,558.3610/24/2019Total83,56744,74338,82483,527 $72,026.44$214,580.78$286,607.22 A-17610366Exhibit BReaffirmation of Agreement and General Release(To be executed no earlier than May 5, 2017 and no later than 21 days after the date Executive executes the Agreement andGeneral Release)For the consideration set forth in the Agreement and General Release between the Company and Byron Selmaneffective May 5, 2017 (the “Agreement”), and in accordance with Section 5e. of the Agreement, Executive hereby reaffirms hiscovenants, obligations, representations and releases contained in the Agreement as of the Separation Date. Executive understands thatas provided in Section 7 of the Agreement, he has twenty-one (21) calendar days to consider whether or not to sign this Bring DownRelease and seven (7) days after signing this Bring Down Release to revoke it. The Executive further agrees and acknowledges that ifthis Bring Down Release is revoked, then the Company shall have no obligation to provide Executive with the payments and benefitsdescribed in Sections 2a. through 2d. of the Agreement. Capitalized terms used herein but not defined shall have the meanings ascribedto them in the Agreement.The Executive knowingly and voluntarily hereby signs this Bring Down Release on May, 5, 2017.Byron Selman/s/ Byron Selman B-17610366Exhibit 21.1Exhibit 21.1 - Subsidiaries of the CompanyEntity NameJurisdiction of Incorporation5D Information Management, Inc.DelawareArryx, Inc.NevadaGlobal Med Technologies, Inc.ColoradoHaemonetics (Hong Kong) LimitedHong KongHaemonetics (UK) LimitedUnited KingdomHaemonetics Asia IncorporatedDelawareHaemonetics Asia UK Ltd.United KingdomHaemonetics Australia PTY Ltd.VictoriaHaemonetics Belgium NVBelgiumHaemonetics BVNetherlandsHaemonetics Canada Ltd.British ColumbiaHaemonetics CZ, spol. s.r.o.Czech RepublicHaemonetics France S.a.r.lFranceHaemonetics GmbHGermanyHaemonetics Handelsgesellschaft m.b.H.AustriaHaemonetics Healthcare India Private LimitedIndiaHaemonetics Hospitalar Ltda.BrazilHaemonetics International Finance S.a.r.l.LuxembourgHaemonetics International Holdings GmbHSwitzerlandHaemonetics IP HC SarlSwitzerlandHaemonetics Italia s.r.l.ItalyHaemonetics Japan GKJapanHaemonetics Korea, Inc.Seoul, KoreaHaemonetics LimitedUnited KingdomHaemonetics Malaysia Sdn. Bhd.MalaysiaHaemonetics Manufacturing, Inc.DelawareHaemonetics (Shanghai) Management Co. Ltd. (formerly known as: Haemonetics Medical Devices (Shanghai)International Trading Co., Ltd.)Shanghai,ChinaHaemonetics Mexico Manufacturing, S.de R.L. de C.V.MexicoHaemonetics New Zealand LimitedNew ZealandHaemonetics Produzione Italia S.r.l.ItalyHaemonetics Puerto Rico LLCPuerto RicoHaemonetics S.A.SwitzerlandHaemonetics Scandinavia ABSwedenHaemonetics Singapore Pte. Ltd.SingaporeHaemoscope CorporationMassachusettsInlog SASFranceInlog Holdings France SASFranceConsent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the following Registration Statements: (1) Registration Statement (Form S-8 No. 333-200226) of Haemonetics Corporation,(2) Registration Statement (Form S-8 No. 333-181847) of Haemonetics Corporation,(3) Registration Statement (Form S-8 No. 333-159434) of Haemonetics Corporation,(4) Registration Statement (Form S-8 No. 333-149205) of Haemonetics Corporation, and(5) Registration Statement (Form S-8 No. 333-136839) of Haemonetics Corporation; of our reports dated May 24, 2017, with respect to the consolidated financial statements and schedule of Haemonetics Corporation and the effectiveness ofinternal control over financial reporting of Haemonetics Corporation included in this Annual Report (Form 10-K) of Haemonetics Corporation for the fiscalyear ended April 1, 2017./s/ Ernst & Young LLPBoston, MassachusettsMay 24, 2017EXHIBIT 31.1CERTIFICATIONI, Christopher Simon, certify that:1.I have reviewed this Annual Report on Form 10-K of Haemonetics Corporation;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date : May 24, 2017 /s/ Christopher Simon Christopher Simon, President and Chief Executive Officer (Principal Executive Officer) EXHIBIT 31.2CERTIFICATIONI, William Burke, certify that:1.I have reviewed this Annual Report on Form 10-K of Haemonetics Corporation;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date : May 24, 2017 /s/ William Burke William Burke, Executive Vice President, Chief Financial Officer(Principal Financial Officer) EXHIBIT 32.1Certification Pursuant To18 USC. Section 1350,As Adopted Pursuant ToSection 906 of the Sarbanes/Oxley Act of 2002In connection with the Annual Report of Haemonetics Corporation (the “Company”) on Form 10-K for the period ended April 1, 2017 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Christopher Simon, President and Chief Executive Officer of the Company, certify,pursuant to Section 1350 of Chapter 63 of Title 18, United States Code, that this Report fully complies with the requirements of Section 13(a) or 15(d) of theSecurities Exchange Act of 1934 and that the information contained in this Report fairly presents, in all material respects, the financial condition and resultsof operations of the Company.Date : May 24, 2017 /s/ Christopher Simon Christopher Simon, President and Chief Executive Officer(Principal Executive Officer) A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signaturethat appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Haemonetics and will beretained by Haemonetics and furnished to the Securities and Exchange Commission or its staff upon request.EXHIBIT 32.2Certification Pursuant To18 USC. Section 1350,As Adopted Pursuant ToSection 906 of the Sarbanes/Oxley Act of 2002In connection with the Annual Report of Haemonetics Corporation (the “Company”) on Form 10-K for the period ended April 1, 2017 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, William Burke, Chief Financial Officer and Executive Vice President of theCompany, certify, pursuant to Section 1350 of Chapter 63 of Title 18, United States Code, that this Report fully complies with the requirements of Section13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this Report fairly presents, in all material respects, the financialcondition and results of operations of the Company.Date : May 24, 2017 /s/ William Burke William Burke, Executive Vice President, Chief Financial Officer(Principal Financial Officer) A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signaturethat appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Haemonetics and will beretained by Haemonetics and furnished to the Securities and Exchange Commission or its staff upon request.

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