0000313143-17-000014.txt : 20170508 0000313143-17-000014.hdr.sgml : 20170508 20170508061934 ACCESSION NUMBER: 0000313143-17-000014 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20170508 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20170508 DATE AS OF CHANGE: 20170508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAEMONETICS CORP CENTRAL INDEX KEY: 0000313143 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 042882273 STATE OF INCORPORATION: MA FISCAL YEAR END: 0328 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14041 FILM NUMBER: 17820415 BUSINESS ADDRESS: STREET 1: 400 WOOD RD CITY: BRAINTREE STATE: MA ZIP: 02184 BUSINESS PHONE: 7818487100 MAIL ADDRESS: STREET 1: 400 WOOD ROAD CITY: BRAINTREE STATE: MA ZIP: 02184 8-K 1 q4mar2017form8-k.htm 8-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 Date of Report (Date of earliest event reported)   May 8, 2017
 HAEMONETICS CORPORATION
(Exact name of registrant as specified in its charter)
 
Massachusetts
 
001-14041
 
04-2882273
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
400 Wood Road
 
02184
(Address of principal executive offices)
 
Zip code
 
Registrant's telephone number, including area code  781-848-7100
 
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Emerging growth company
o
 
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the

 
 
Exchange Act.
o





Item 2.02               RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
On May 8, 2017, Haemonetics Corporation (the “Company”) issued a press release announcing financial results for the fourth quarter ended April 1, 2017. A copy of the release is furnished with this report as exhibit 99.1.
 
The information in this current report on Form 8-K and the exhibit attached hereto shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01               FINANCIAL STATEMENTS AND EXHIBITS

99.1: Press Release of Haemonetics Corporation dated May 8, 2017 announcing financial results for the fourth quarter ended April 1, 2017.



 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
HAEMONETICS CORPORATION
 
 
 
 
 
 
 
 
Date : May 8, 2017
By:
/s/ Christopher Simon
 
 
Christopher Simon, President and
 
 
Chief Executive Officer




 EX-99.1 2 ex991-q4mar2017earningsrel.htm EXHIBIT 99.1 Exhibit
image0a06.jpg

 
 
 
Exhibit 99.1
 
 
 
 
Earnings Release FY17 Q4
 
Investor Contact
 
 
 
Gerry Gould, VP-Investor Relations
 
 
 
(781) 356-9402
 
 
 
gerry.gould@haemonetics.com
 
 
 
 

Haemonetics Reports 4th Quarter and Fiscal Year 2017 Results and Provides Fiscal 2018 Guidance

Braintree, MA, May 8, 2017 - Haemonetics Corporation (NYSE: HAE) reported fourth quarter fiscal 2017 revenue of $228.1 million, down 6% compared to the fourth quarter of fiscal 2016 and down 5% in constant currency. The prior year fourth quarter included a 14th week, which was estimated to decrease the revenue growth rate by 6% in the fourth quarter of fiscal 2017.

The Company reported a fourth quarter fiscal 2017 net loss of $51.1 million or $0.98 per share. Fourth quarter fiscal 2017 adjusted net income was $20.4 million, up 8%, and adjusted earnings per share were $0.39, up 5%, compared to the prior year quarter.

For the fiscal year ended April 1, 2017, revenue was $886.1 million, down 2.5% as reported and down 1% in constant currency. The prior year included a 53rd week, which was estimated to decrease the revenue growth rate by 2% in fiscal 2017.

The Company reported a fiscal year 2017 net loss of $26.3 million or $0.51 per share. Fiscal 2017 adjusted net income was $79.3 million, down 6%, and adjusted earnings per share were $1.53, down 6%, compared to the prior fiscal year.

Christopher Simon, Haemonetics’ CEO, stated: “We achieved our revenue, profit and free cash flow objectives in fiscal 2017, while completing the first of three phases comprising our company’s turnaround. We have stabilized our performance and we are advancing toward a culture of delivering on commitments.

“We exceeded our $40 million fiscal 2017 savings target and we enter fiscal 2018 well-positioned to move forward with the second phase, furthering productivity advances, making key investments and executing new product rollouts. In doing so, we will enable the company to realize growth acceleration in the final turnaround phase in fiscal 2019 and beyond.”





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REPORTING PERIODS

The Company follows a fiscal year reporting convention ending on the Saturday closest to March 31. Fiscal 2017 consisted of 52 weeks, with a 13-week fourth quarter. Fiscal 2016 consisted of 53 weeks with a 14-week fourth quarter. The extra week provided incremental revenue estimated at $15 million, accounting for lower revenue growth of 6% in the fourth quarter of fiscal 2017 and 2% in fiscal year 2017.

FOURTH QUARTER AND FISCAL 2017 REVENUE

Fourth quarter and fiscal year 2017 revenue were down 6% and 2.5%, respectively, as reported. Fourth quarter and fiscal year revenue were down 5% and 1% in constant currency, respectively. Business unit revenue growth rates, in constant currency, were as follow:
    
 
Reported
Constant Currency
 
4Q17
FY17
4Q17
FY17
Plasma
 + 1%
+ 8%
+ 2%
+ 9%
Hospital: Hemostasis Management
+ 6%
+11%
+ 8%
+14%
Hospital: Cell Processing & Transfusion Mgmt.
(5%)
(6%)
(3%)
(4%)
Blood Center
(15%)
(14%)
(15%)
(14%)

These fourth quarter growth rates compare 13 weeks revenue in 2017 to 14 weeks revenue in 2016; and these fiscal year growth rates compare 52 weeks revenue in 2017 to 53 weeks revenue in 2016.

OPERATING RESULTS
 
Fourth quarter fiscal 2017 gross margin was 36.0%, down 80 bps compared to the prior year fourth quarter, and fiscal year 2017 gross margin was 42.7%, down 200 bps compared to fiscal 2016. The Company recorded $16 million of non-cash impairment and other charges in cost of goods sold in the fourth quarter of fiscal 2017. Fourth quarter adjusted gross margin was 43.0%, up 170 bps compared to prior year and 44.7%, down 150 bps, in fiscal year 2017.

Operating expenses were $139.6 million and $94.8 million in the fourth quarters of fiscal 2017 and 2016, respectively. Adjusted operating expenses were $70.0 million, down 6% in the fourth quarter and $280.5 million, down 7% in fiscal year 2017 compared to the prior fiscal year.

The Company reported a fourth quarter net operating loss of $57.5 million in fiscal 2017, compared to a net operating loss of $5.6 million in fiscal 2016.

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Fiscal 2017 net operating loss of $19.4 million compared to a net operating loss of $43.9 million in fiscal 2016. Fourth quarter fiscal 2017 adjusted operating income was $27.9 million, up 8% over the prior year. Adjusted operating income was $115.4 million in fiscal 2017, down 4% compared to the prior year.

GOODWILL AND OTHER NON-CASH WRITE-DOWNS

The Company recorded non-cash goodwill impairment charges of $57 million in fiscal 2017 and $66 million in fiscal 2016, as a result of its annual impairment tests required under generally accepted accounting principles (GAAP). The Company also recorded $18 million of non-cash charges in fiscal 2017 and $34 million in fiscal 2016 to write down other underperforming assets. These non-cash accounting charges will not impact liquidity, cash flows from operations, future operations or compliance with debt covenants.

Balance Sheet and Cash Flow

Cash on hand at April 1, 2017 was $140 million, an increase of $24 million during fiscal 2017. The Company utilized $93 million of cash for debt repayments and $35 million of cash, less $10 million of cash tax benefits, for restructuring and turnaround initiatives. Fiscal 2017 free cash flow was $86 million, including net restructuring and turnaround funding requirements, and $112 million before such funding.

RESTRUCTURING AND TURNAROUND EXPENSES AND DEAL AMORTIZATION

In the fourth quarter of fiscal 2017, the Company incurred $7 million of restructuring and turnaround expenses pre-tax. In fiscal 2017, the Company incurred $34 million of such expenses pre-tax, or $23 million net of tax benefit.

Also excluded from fiscal 2017 and fiscal 2016 fourth quarter pre-tax adjusted earnings were deal amortization expenses of $7 million. Deal amortization expenses excluded from fiscal year adjusted earnings were $27 million in fiscal 2017 and $29 million in fiscal 2016, respectively.

Fiscal 2018 Guidance

Overall fiscal 2018 revenue is expected to approximate fiscal 2017 revenue. Business unit revenue growth guidance for fiscal 2018 follows:
Plasma
 3-5%
Hospital
 7-10%
Blood Center
(7-10%)

3
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Early in fiscal 2018, the Company divested its SEBRA line of benchtop and hand held sealers, representing $6 million or 1.4% of annual Plasma revenue. The revenue impact of the SEBRA divestiture and the resulting impact on fiscal 2018 earnings are included in the guidance provided. A high single-digit percentage growth rate is expected for Plasma disposables in North America.

The Company expects operating income to approximate 10-11% of revenue in fiscal 2018, with adjusted operating income of 13-14% of revenue and fiscal 2018 adjusted earnings per share of $1.55 - $1.65.

Fiscal 2018 adjusted free cash flow, including funding of investments, is expected to approximate $35 - $55 million before funding after-tax turnaround and restructuring related costs.

Anticipated investments of $70-$90 million are included in the fiscal 2018 guidance ranges provided and are comprised of $15-$25 million of after-tax operating expenses representing $0.40-$0.50 earnings per share, plus $55-$65 million of capital expenditures.

WEBCAST CONFERENCE CALL AND RESULTS ANALYSIS

Haemonetics will host a webcast to discuss fourth quarter and fiscal year 2017 results and fiscal 2018 guidance on Monday, May 8, 2017 at 8:00am Eastern Time. Interested parties may participate at: http://edge.media-server.com/m/p/6zwag47r.

The Company is posting this press release to its Investor Relations website, in addition to results analyses that will be referenced on the webcast. These analyses can be accessed by the following direct link: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzYzMjg5fENoaWxkSUQ9LTF8VHlwZT0z&t=1&cb=636204319995092420.

About Haemonetics

Haemonetics (NYSE: HAE) is a global healthcare company dedicated to providing a suite of innovative hematology products and solutions for customers, to help them improve patient care and reduce the cost of healthcare. Our technology addresses important medical markets: blood and plasma component collection, the surgical suite, and hospital transfusion services. To learn more about Haemonetics, visit www.haemonetics.com.




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Forward Looking Statements

The Company provides forward-looking statements that could be influenced by risks and uncertainties, 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 and standards for transfusion medicine and our ability to successfully offer products that incorporate such advances and standards, product quality, market acceptance, regulatory uncertainties, including in the receipt or timing of regulatory approvals, the effect of economic and political conditions, the impact of competitive products and pricing, blood product reimbursement policies and practices, foreign currency exchange rates, changes in customers’ ordering patterns including single-source tenders, the effect of industry consolidation as seen in the plasma and blood center markets, the effect of communicable diseases and the effect of uncertainties in markets outside the U.S. (including Europe and Asia) in which we operate and other risks detailed in the Company's filings with the Securities and Exchange Commission.
The foregoing list should not be construed as exhaustive.
Forward-looking statements are based on estimates and assumptions made by management of the Company and are believed to be reasonable, though inherently uncertain and difficult to predict. Actual results and experience could differ materially from the forward-looking statements. Information set forth in this press release is current as of today and the Company undertakes no duty or obligation to update this information.    
MANAGEMENT’S USE OF NON-GAAP MEASURES

Management uses non-GAAP measures to monitor the financial performance of the business, make informed business decisions, establish budgets, and forecast future results.

In this release, supplemental non-GAAP measures have been provided to assist investors in evaluating the performance of the Company’s core operations. When used in this release, constant currency measures the change in revenue using a constant currency conversion rate. Adjusted operating income, net income and earnings per share exclude restructuring and turnaround and deal amortization expenses and non-cash write-downs of goodwill and other intangible assets. Free cash flow is defined as cash provided by operating activities less capital expenditures, net of the proceeds from the sale of property, plant and equipment. Reconciliations of these measures to their most comparable GAAP measure are included at the end of the financial sections of this press release as well as on the company’s website at www.haemonetics.com.


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Haemonetics Corporation Financial Summary
Condensed Consolidated Statements of Loss for the Fourth Quarter of FY17 and FY16
(Data in thousands, except per share data)
 
 
 
 
 
 
 
 
 
4/1/2017
 
4/2/2016
 
% Inc/(Dec)
 
 
 
 
vs Prior Year
 
 
(unaudited)
 
 
Net revenues
$
228,066

 
$
242,342

 
(5.9)%
Gross profit
82,111

 
89,223

 
(8.0)%
 
 
 
 
 
 
 
 
R&D
9,321

 
11,149

 
(16.4)%
 
S,G&A
73,087

 
76,277

 
(4.2)%
 
Impairment of assets
57,209

 
7,347

 
n/m
Operating expenses
139,617

 
94,773

 
47.3%
 
 
 
 
 
 
 
Operating loss
(57,506
)
 
(5,550
)
 
n/m
 
 
 
 
 
 
 
Interest and other expense, net
(1,681
)
 
(2,718
)
 
(38.2)%
 
 
 
 
 
 
 
Loss before taxes
(59,187
)
 
(8,268
)
 
n/m
 
 
 
 
 
 
 
Tax (benefit) expense
(8,047
)
 
467

 
n/m
 
 
 
 
 
 
 
Net loss
$
(51,140
)
 
$
(8,735
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss per common share
$
(0.98
)
 
$
(0.17
)
 
n/m
 
 
 
 
 
 
 
Weighted average number of shares:
 
 
 
 
 
 
Basic and Diluted
51,990

 
50,863

 
 
 
 
 
 
 
 
 
Profit Margins:
 
 
 
 
Inc/(Dec) vs prior year profit margin %
Gross profit
36.0
 %
 
36.8
 %
 
(0.8)%
R&D
4.1
 %
 
4.6
 %
 
(0.5)%
S,G&A
32.0
 %
 
31.5
 %
 
0.5%
Operating loss
(25.2
)%
 
(2.3
)%
 
(22.9)%
Loss before taxes
(26.0
)%
 
(3.4
)%
 
(22.6)%
Net loss
(22.4
)%
 
(3.6
)%
 
(18.8)%



6
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Haemonetics Corporation Financial Summary
Condensed Consolidated Statements of Loss for FY17 and FY16
(Data in thousands, except per share data)
 
 
 
 
 
 
 
 
 
4/1/2017
 
4/2/2016
 
% Inc/(Dec)
 
 
 
 
vs Prior Year
 
 
(unaudited)
 
 
Net revenues
$
886,116

 
$
908,832

 
(2.5)%
Gross profit
378,494

 
405,914

 
(6.8)%
 
 
 
 
 
 
 
 
R&D
37,556

 
44,965

 
(16.5)%
 
S,G&A
301,726

 
317,223

 
(4.9)%
 
Impairment of assets
58,593

 
92,395

 
(36.6)%
 
Contingent consideration income
—

 
(4,727
)
 
(100.0)%
Operating expenses
397,875

 
449,856

 
(11.6)%
 
 
 
 
 
 
 
Operating loss
(19,381
)
 
(43,942
)
 
(55.9)%
 
 
 
 
 
 
 
Interest and other expense, net
(8,095
)
 
(9,474
)
 
(14.6)%
 
 
 
 
 
 
 
Loss before taxes
(27,476
)
 
(53,416
)
 
(48.6)%
 
 
 
 
 
 
 
Tax (benefit) expense
(1,208
)
 
2,163

 
n/m
 
 
 
 
 
 
 
Net loss
$
(26,268
)
 
$
(55,579
)
 
(52.7)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss per common share
$
(0.51
)
 
$
(1.09
)
 
(53.2)%
 
 
 
 
 
 
 
Weighted average number of shares:
 
 
 
 
 
 
Basic and Diluted
51,524

 
50,910

 
 
 
 
 
 
 
 
 
Profit Margins:
 
 
 
 
Inc/(Dec) vs prior year profit margin %
Gross profit
42.7
 %
 
44.7
 %
 
(2.0)%
R&D
4.2
 %
 
4.9
 %
 
(0.7)%
S,G&A
34.1
 %
 
34.9
 %
 
(0.8)%
Operating loss
(2.2
)%
 
(4.8
)%
 
2.6%
Loss before taxes
(3.1
)%
 
(5.9
)%
 
2.8%
Net loss
(3.0
)%
 
(6.1
)%
 
3.1%


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Revenue Analysis for the Fourth Quarter of FY17 and FY16
(Data in thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
 
 
 
4/1/2017
 
4/2/2016
 
Percent change
 
Currency impact
 
Constant currency growth (1)
 
 
(unaudited)
 
 
 
 
 
 
Revenues by geography
 
 
 
 
 
 
 
 
 
 
United States
$
129,384

 
$
140,050

 
(7.6
)%
 
—
 %
 
(7.6
)%
 
International
98,682

 
102,292

 
(3.5
)%
 
(1.8
)%
 
(1.7
)%
Net revenues
$
228,066

 
$
242,342

 
(5.9
)%
 
(0.8
)%
 
(5.1
)%
 
 
 
 
 
 
 
 
 
 
 
Revenues by franchise
 
 
 
 
 
 
 
 
 
 
Plasma
$
100,859

 
$
99,635

 
1.2
 %
 
(0.6
)%
 
1.8
 %
 
Blood Center
82,323

 
97,372

 
(15.5
)%
 
(0.6
)%
 
(14.9
)%
 
Cell Processing
27,427

 
28,824

 
(4.8
)%
 
(1.8
)%
 
(3.0
)%
 
Hemostasis Management
17,457

 
16,511

 
5.7
 %
 
(1.8
)%
 
7.5
 %
Net revenues
$
228,066

 
$
242,342

 
(5.9
)%
 
(0.8
)%
 
(5.1
)%

(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 description of non-GAAP financial measures contained in this release.



Revenue Analysis for FY17 and FY16
(Data in thousands)
 
 
 
 
 
 
 
 
 
Year Ended
 
 
 
 
 
 
 
 
4/1/2017
 
4/2/2016
 
Percent change
 
Currency impact
 
Constant currency growth (1)
 
 
(unaudited)
 
 
 
 
 
 
Revenues by geography
 
 
 
 
 
 
 
 
 
 
United States
$
522,686

 
$
519,440

 
0.6
 %
 
—
 %
 
0.6
 %
 
International
363,430

 
389,392

 
(6.7
)%
 
(3.1
)%
 
(3.6
)%
Net revenues
$
886,116

 
$
908,832

 
(2.5
)%
 
(1.3
)%
 
(1.2
)%
 
 
 
 
 
 
 
 
 
 
 
Revenues by franchise
 
 
 
 
 
 
 
 
 
 
Plasma
$
410,727

 
$
381,776

 
7.6
 %
 
(1.0
)%
 
8.6
 %
 
Blood Center
303,890

 
355,108

 
(14.4
)%
 
(0.9
)%
 
(13.5
)%
 
Cell Processing
105,376

 
112,483

 
(6.3
)%
 
(2.5
)%
 
(3.8
)%
 
Hemostasis Management
66,123

 
59,465

 
11.2
 %
 
(2.6
)%
 
13.8
 %
Net revenues
$
886,116

 
$
908,832

 
(2.5
)%
 
(1.3
)%
 
(1.2
)%

(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 description of non-GAAP financial measures contained in this release.




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Condensed Consolidated Balance Sheets
(Data in thousands)
 
 
 
 
 
 
 
As of
 
 
 
4/1/2017
 
4/2/2016
 
 
 
(unaudited)
 
 
Assets
 
 
 
Cash and cash equivalents
$
139,564

 
$
115,123

Accounts receivable, net
152,683

 
157,093

Inventories, net
176,929

 
187,028

Other current assets
40,853

 
28,842

 
 
Total current assets
510,029

 
488,086

Property, plant & equipment, net
323,862

 
337,634

Intangible assets, net
177,540

 
204,458

Goodwill
210,841

 
267,840

Other assets
16,437

 
21,110

 
Total assets
$
1,238,709

 
$
1,319,128

 
 
 
 
 
 
Liabilities & Stockholders' Equity
 
 
 
Short-term debt & current maturities
$
61,022

 
$
43,471

Other current liabilities
150,157

 
142,080

 
 
Total current liabilities
211,179

 
185,551

Long-term debt
253,625

 
364,529

Other long-term liabilities
34,295

 
47,483

Stockholders' equity
739,610

 
721,565

 
Total liabilities & stockholders' equity
$
1,238,709

 
$
1,319,128



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Condensed Consolidated Statements of Cash Flows
(Data in thousands)
 
 
 
Year Ended
 
4/1/2017
 
4/2/2016
 
(unaudited)
Cash Flows from Operating Activities:
 
 
 
Net loss
$
(26,268
)
 
$
(55,579
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization
89,733

 
89,911

Impairment of assets
75,348

 
101,243

Stock-based compensation expense
9,150

 
6,949

Provision for losses on accounts receivable and inventory
11,381

 
13,053

Change in other non-cash operating activities
1,377

 
(7,511
)
Change in accounts receivable, net
3,155

 
(10,328
)
Change in inventories
(1,552
)
 
11,896

Change in other working capital
(2,586
)
 
(27,769
)
Net cash provided by operating activities
159,738

 
121,865

Cash Flows from Investing Activities:
 
 
 
Capital expenditures
(76,135
)
 
(102,405
)
Proceeds from sale of property, plant and equipment
2,822

 
637

Other
—

 
(3,000
)
Net cash used in investing activities
(73,313
)
 
(104,768
)
Cash Flows from Financing Activities:
 
 
 
Debt repayments, net
(93,410
)
 
(20,013
)
Proceeds from employee stock programs
32,997

 
18,373

Share repurchases
—

 
(60,984
)
Net cash used in financing activities
(60,413
)
 
(62,624
)
Effect of exchange rates on cash and cash equivalents
(1,571
)
 
(12
)
Net Change in Cash and Cash Equivalents
24,441

 
(45,539
)
Cash and Cash Equivalents at Beginning of the Period
115,123

 
160,662

Cash and Cash Equivalents at End of Period
$
139,564

 
$
115,123

 
 
 
 
Free Cash Flow Reconciliation*:
 
 
 
 
 
 
 
Free cash flow after restructuring and turnaround costs
$
86,425

 
$
20,097

Restructuring and turnaround costs
35,231

 
43,394

Tax benefit on restructuring and turnaround costs
(8,607
)
 
(13,322
)
Capital expenditures on VCC initiatives
—

 
7,880

Free cash flow before restructuring, turnaround costs and VCC capital expenditures
$
113,049

 
$
58,049


* Free cash flow, a non-GAAP financial measure, is defined as cash provided by operating activities less capital expenditures net of the proceeds from the sale of property, plant and equipment.

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Haemonetics Corporation Financial Summary
Reconciliation of Non-GAAP Measures

Haemonetics has presented supplemental non-GAAP financial measures as part of this earnings release. A reconciliation is provided below that reconciles each non-GAAP financial measure with the most comparable GAAP measure. The presentation of non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the most directly comparable GAAP measures. There are material limitations to the usefulness of non-GAAP measures on a standalone basis, including the lack of comparability to the GAAP financial results of other companies.
These measures are used by management to monitor the financial performance of the business, make informed business decisions, establish budgets and forecast future results. Performance targets for management are established based upon these non-GAAP measures. In the reconciliations below, we have removed restructuring, turnaround and other costs from our GAAP expenses. Our restructuring and turnaround costs for the periods reported are principally related to employee severance and retention, product line simplification, accelerated depreciation and other costs associated with the fiscal 2017 restructuring initiative announced May 9, 2016.
In addition to restructuring and turnaround costs, we are reporting non-GAAP earnings before deal amortization and asset impairments.
We believe this information is useful to investors because it allows for an evaluation of the Company with a focus on the performance of our core operations.


11
image0a06.jpg

Reconciliation of Adjusted Measures for the Fourth Quarter of FY17 and FY16
(Data in thousands except per share data)
 
Three Months Ended
 
4/1/2017
 
4/2/2016
 
(unaudited)
GAAP gross profit
$
82,111

 
$
89,223

Restructuring and turnaround costs
1,021

 
2,618

Impairment of assets
14,839

 
8,132

Adjusted gross profit
$
97,971

 
$
99,973

 
 
 
 
GAAP operating expenses
$
139,617

 
$
94,773

Restructuring and turnaround costs
(6,101
)
 
(9,821
)
Impairment of assets
(56,989
)
 
(4,050
)
Deal amortization
(6,496
)
 
(6,765
)
Adjusted operating expenses
$
70,031

 
$
74,137

 
 
 
 
GAAP operating loss
$
(57,506
)
 
$
(5,550
)
Restructuring and turnaround costs
7,122

 
12,439

Impairment of assets
71,828

 
12,182

Deal amortization
6,496

 
6,765

Adjusted operating income
$
27,940

 
$
25,836

 
 
 
 
GAAP net loss
$
(51,140
)
 
$
(8,735
)
Restructuring and turnaround costs
7,165

 
12,430

Impairment of assets
71,828

 
12,182

Deal amortization
6,496

 
6,765

Tax benefit associated with adjustments
(13,975
)
 
(3,822
)
Adjusted net income
$
20,374

 
$
18,820

 
 
 
 
GAAP net loss per common share
$
(0.98
)
 
$
(0.17
)
Adjusted items after tax per common share assuming dilution
$
1.37

 
$
0.54

Adjusted net income per common share assuming dilution
$
0.39

 
$
0.37


12
image0a06.jpg

Reconciliation of Adjusted Measures for FY17 and FY16
(Data in thousands except per share data)
 
Year Ended
 
4/1/2017
 
4/2/2016
 
(unaudited)
GAAP gross profit
$
378,494

 
$
405,914

Restructuring and turnaround costs
1,426

 
5,913

Impairment of assets
15,971

 
8,132

Adjusted gross profit
$
395,891

 
$
419,959

 
 
 
 
 
 
 
 
GAAP operating expenses
$
397,875

 
$
449,856

Restructuring and turnaround costs
(32,911
)
 
(36,272
)
Impairment of assets
(57,382
)
 
(89,098
)
Deal amortization
(27,107
)
 
(28,958
)
Contingent consideration income
—

 
4,727

Adjusted operating expenses
$
280,475

 
$
300,255

 
 
 
 
GAAP operating loss
$
(19,381
)

$
(43,942
)
Restructuring and turnaround costs
34,337

 
42,185

Impairment of assets
73,353

 
97,230

Deal amortization
27,107

 
28,958

Contingent consideration income
$
—

 
$
(4,727
)
Adjusted operating income
$
115,416

 
$
119,704

 
 
 
 
GAAP net loss
$
(26,268
)
 
$
(55,579
)
Restructuring and turnaround costs
34,316

 
42,284

Impairment of assets
73,353

 
97,230

Deal amortization
27,107

 
28,958

Contingent consideration income
—

 
(4,727
)
Tax benefit associated with adjustments
(29,192
)
 
(24,196
)
Adjusted net income
$
79,316

 
$
83,970

 
 
 
 
GAAP net loss per common share
$
(0.51
)
 
$
(1.09
)
Adjusted items after tax per common share assuming dilution
$
2.04

 
$
2.72

Adjusted net income per common share assuming dilution
$
1.53

 
$
1.63



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