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ACQUISITIONS | 9 Months Ended
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Dec. 29, 2012
Business Combinations [Abstract] |
ACQUISITIONS | ACQUISITIONS Pall Acquisition On August 1, 2012, we completed the acquisition from Pall Corporation (“Pall”) of substantially all of the assets relating to its blood collection, filtration, processing, storage, and re-infusion product lines, and all of the outstanding equity interest in Pall Mexico Manufacturing, S. de R.L. de C.V., a subsidiary of Pall based in Mexico pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) with Pall. We refer to the acquired business as the “whole blood business.” At the closing of the transaction, we paid Pall $535.1 million in cash consideration, which is subject to post-closing adjustments. During the three months ended December 29, 2012 we accrued $4.6 million for post-closing adjustments related to estimated historical earnings and working capital transferred which will be paid to Pall in the fourth quarter of fiscal 2013. We anticipate paying an additional $15.0 million upon replication and delivery of certain manufacturing assets of Pall's filter media business to Haemonetics by 2016. Until that time, Pall will manufacture and sell filter media to Haemonetics under a supply agreement. We entered into a credit agreement on August 1, 2012 in connection with the transaction which includes a $475.0 million term loan to fund the majority of the cash paid to Pall. See Note 14 for a detailed description of the key terms and provisions of the credit agreement. We acquired the whole blood business to provide access to the manual collection and whole blood markets and provide scope for introduction of automated solutions in those markets. The whole blood business manufactures and sells manual blood collection systems and filters and has operations in North America, Europe and Asia Pacific countries. Revenue from the sale of whole blood disposables will be reported within the blood center disposables product line. The assets and liabilities acquired from Pall were recorded at fair value at the date of acquisition. During the current period, we updated the fair value of assets and liabilities recorded as of the date of acquisition with a corresponding adjustment to goodwill to reflect such updates to the allocation of purchase price. The allocation of purchase price, and assessment of useful lives, is preliminary and based on management's judgments after evaluating several factors, including preliminary valuation assessments of tangible and intangible assets and preliminary estimates of the fair value of liabilities assumed. The allocation of the purchase price to the assets acquired and liabilities assumed will be completed when the working capital adjustment is finalized and valuation assessments of inventory, property, plant and equipment and intangible assets, and estimates of the fair value of liabilities assumed are completed. We expect to complete these valuations by March 30, 2013. The preliminary allocation of the purchase price to the estimated fair value of the acquired assets and liabilities is summarized as follows:
Asset class |  | Amounts Recognized as of December 29, 2012 (Provisional)
(in thousands) |  |
Inventories |  | $ | 50,741 |
Property, plant and equipment |  | 93,847 |
Intangible assets |  | 188,500 |
Other assets/liabilities, net |  | 320 |
Goodwill |  | 206,303 |
Fair value of net assets acquired |  | $ | 539,711 |
The adjusted fair value of the acquired assets and liabilities are reflected in the Consolidated Balance Sheets. The provisional allocation of purchase price changed as compared to the initial allocation as of September 29, 2012 as follows: inventory reduced by $1.7 million, property, plant and equipment increased by $23.1 million, intangible assets reduced by $18.3 million, other assets increased by $0.1 million, liabilities reduced by $2.0 million and goodwill decreased by $0.7 million. This is represented by an increase in purchase consideration of $4.5 million arising from provisional customary adjustments. The $188.5 million of acquired intangible assets was allocated to acquired technology and customer relationships at preliminary fair values of $61.0 million and $127.5 million, respectively. The acquired assets are amortized over the preliminary estimate of their useful lives of 11 years on a straight-line basis. We will conclude on the useful lives of acquired assets in connection with finalizing the overall purchase price allocation. We recorded $3.7 million and $7.1 million in amortization expense relating to the acquired intangible assets for the three and nine months ended December 29, 2012. Preliminary goodwill represents the excess of the purchase price over the fair value of the net assets. Preliminary goodwill of $206.3 million represents future economic benefits expected to arise from work force at the various plants and locations and significant technological know-how in filter manufacturing. All of the domestic goodwill is deductible for tax purposes. Revenue and earnings for the whole blood business from acquisition was $83.5 million and $8.0 million, respectively. The estimated impact to earnings includes $11.1 million of costs of goods sold related to the increase in fair value of acquired inventory. We recognized $3.2 million of transaction costs related to the whole blood acquisition in the consolidated statements of income and comprehensive income for the nine months ended December 29, 2012. The following represents the pro forma consolidated statements of income and comprehensive income as if the acquisition of the whole blood business had been included in our consolidated results on April 3, 2011. The common stock weighted average number of shares used in calculating the pro-forma earnings per share has been retroactively adjusted for the stock split:
| Nine Months Ended
(in thousands) | December 29, 2012 |  | December 31, 2011
Net sales | $ | 713,981 |  |  | $ | 703,023 |
Net income | 42,975 |  |  | 47,961 |
Basic earnings per share | $ | 0.84 |  |  | $ | 0.94 |
Diluted earnings per share | $ | 0.82 |  |  | $ | 0.93 |
The unaudited consolidated pro-forma financial information above includes the following significant adjustments made to account for certain costs which would have been incurred if the acquisition had been completed on April 3, 2011, as adjusted for the applicable tax impact. As our acquisition of the whole blood business was completed on August 1, 2012, the pro-forma adjustments for the nine months ended December 29, 2012 in the table below only include the required adjustments through August 1, 2012.
| Nine Months Ended
(in thousands) | December 29, 2012 |  | December 31, 2011
Transaction costs (1) | $ | 3,184 |  |  | $ | — |
Amortization of inventory fair value adjustment (2) | 11,067 |  |  | (11,067 | )
Amortization of acquired intangible assets (3) | (5,712 | ) |  | (12,852 | )
Interest expense incurred on acquisition financing (4) | (3,173 | ) |  | (7,137 | )
Selling, general and admin expenses (5) | (3,513 | ) |  | (7,905 | )
(1) | Eliminated transactions costs as these non-recurring costs were incurred in the first and second quarters of FY13.
(2) | Added additional expense in the period ended December 31, 2011 to reflect the inventory fair value adjustments which would have been amortized had the transaction been consummated on April 3, 2011 as the corresponding inventory would have been completely sold during the first two quarters of 2011. Also, deducted the actual inventory fair value adjustment recorded in the nine months ended December 29, 2012 to reflect the pro-forma consumption of inventory in 2011.
(3) | Added additional amortization of the acquired whole blood intangible assets recognized at fair value in purchase accounting.
(4) | Added additional interest expense for the debt used to finance the acquisition.
(5) | Additional investments in infrastructure costs to replicate certain support functions performed by division or corporate organizations of Pall that did not transfer in the acquisition. These costs are primarily related to information technology infrastructure and application costs, and personnel costs required to expand regional and corporate administrative and sales support functions. These costs are not intended to be representative of actual costs incurred by Pall Corporation, and represent Haemonetics' best estimate of future incremental costs on an annualized basis. Actual incremental investments may differ from these estimates.
Prior to the acquisition, we had purchased filters from the whole blood business for inclusion in some of our devices. The transactional value between both parties approximated $10.0 million which was recorded as a cost of sale. At the acquisition date, there were no amounts due to or due from the whole blood business.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1392-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4845-128472 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4926-128472 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1490-128463 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6927-128479 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7008-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7000-128479 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1524-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1383-128463 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1486-128463 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1500-128463 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Paragraph 67-73 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Paragraph F4 -Subparagraph e -Appendix F Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1497-128463 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4922-128472 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 88-16 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141 -Paragraph 51, 52 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6996-128479 + Details
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