CAUTIONARY STATEMENT
Some of the statements contained in this report and documents incorporated by
reference herein are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). These statements involve
known and unknown risks, uncertainties and other factors which may cause our or
our industry's actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. Forward-looking statements may
include, but are not limited to, statements regarding:

•the ongoing and possible future effects of the global COVID-19 pandemic and
associated economic disruptions on our business, financial condition, results of
operations and cash flows and our ability to draw down our revolver;
•the ongoing and possible future effects of the global COVID-19 pandemic on our
customers and suppliers;
•continued demand for our COVID-19 assays;
•the timing, scope and effect of further U.S. and international governmental,
regulatory, fiscal, monetary and public health responses to the COVID-19
pandemic;
•our ability to manufacture, on a scale necessary to meet demand, our COVID-19
assays as well as the systems on which the assays run;
•our ability to predict accurately the demand for our products, and products
under development and to develop strategies to address markets successfully;
•the effect of the continuing worldwide macroeconomic uncertainty, including the
UK's decision to leave the European Union (known as Brexit), on our business and
results of operations;
•the impact and anticipated benefits of completed acquisitions, and acquisitions
we may complete in the future
•the effect of the current trade war between the U.S. and other nations, most
notably China, and the impending impact of tariffs on the sale of our products
in those countries and potential increased costs we may incur to purchase
materials from our suppliers to manufacture our products;
•the development of new competitive technologies and products, and the impact
and anticipated benefits of completed acquisitions and acquisitions we may
complete in the future;
•the ability to consolidate certain of our manufacturing and other operations on
a timely basis and within budget, without disrupting our business and to achieve
anticipated cost synergies related to such actions;
•the ability to successfully manage ongoing organizational and strategic
changes, including our ability to attract, motivate and retain key employees and
maintain engagement and efficiency in remote work environments;
•our ability to obtain regulatory approvals and clearances for our products,
including the implementation of the new European Union Medical Device
Regulations, and maintain compliance with complex and evolving regulations;
•potential cybersecurity threats and targeted computer crime;
•the coverage and reimbursement decisions of third-party payors;
•the uncertainty of the impact of cost containment efforts and federal
healthcare reform legislation on our business and results of operations;
•the guidelines, recommendations, and studies published by various organizations
relating to the use of our products;
•the effect of consolidation in the healthcare industry;
•the possibility of interruptions or delays at our manufacturing facilities, or
the failure to secure alternative suppliers if any of our sole source
third-party manufacturers fail to supply us;
•our ability to meet production and delivery schedules for our products;
•our ability to protect our intellectual property rights;
•the possibility that products may contain undetected errors or defects or
otherwise not perform as anticipated;
•the anticipated development of markets we sell our products into and the
success of our products in these markets;
•the anticipated performance and benefits of our products;
•business strategies;
•estimated asset and liability values;
•conducting business internationally;
•the impact and costs and expenses of any litigation we may be subject to now or
in the future;
•our compliance with covenants contained in our debt agreements;
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•anticipated trends relating to our financial condition or results of
operations, including the impact of interest rate and foreign currency exchange
fluctuations, including the potential impact of the proposed phase out of LIBOR
by the end of 2023; and
•our liquidity, capital resources and the adequacy thereof.
In some cases, you can identify forward-looking statements by terms such as
"may," "will," "should," "could," "would," "expects," "plans," "intends,"
"anticipates," "believes," "estimates," "projects," "predicts," "likely,"
"future," "strategy." "potential," "seeks," "goal" and similar expressions
intended to identify forward-looking statements. These statements are only
predictions and involve known and unknown risks, uncertainties, and other
factors that may cause our actual results, levels of activity, performance, or
achievements to be materially different from any future results, levels of
activity, performance, or achievements expressed or implied by such
forward-looking statements. Given these uncertainties, you should not place
undue reliance on these forward-looking statements. Also, these forward-looking
statements represent our estimates and assumptions only as of the date of this
report. Except as otherwise required by law, we expressly disclaim any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statement contained in this report to reflect any change in our
expectations or any change in events, conditions or circumstances on which any
of our forward-looking statements are based. Factors that could cause or
contribute to differences in our future financial results include the cautionary
statements set forth herein and in our other filings with the Securities and
Exchange Commission, including those set forth under "Risk Factors" set forth in
Part II, Item 1A of this Quarterly Report, as well as those described in our
Annual Report on Form 10-K for the fiscal year ended September 26, 2020 or any
other of our subsequently filed reports. We qualify all of our forward-looking
statements by these cautionary statements.
OVERVIEW
We are a developer, manufacturer and supplier of premium diagnostics products,
medical imaging systems, and surgical products focused on women's health and
well-being through early detection and treatment. We sell and service our
products through a combination of direct sales and service personnel and a
network of independent distributors and sales representatives. We operate in
four segments: Diagnostics, Breast Health, GYN Surgical and Skeletal Health.
Until December 30, 2019, our product portfolio included aesthetic and medical
treatments systems sold by our former Medical Aesthetic business. We completed
the sale of our Medical Aesthetics segment on December 30, 2019 (the first day
of the second quarter of fiscal 2020).
Through our Diagnostics segment, we offer a wide range of diagnostics products,
which are used primarily to aid in the screening and diagnosis of human
diseases. Our primary Diagnostics products include our molecular diagnostic
assays, which run on our advanced instrumentation systems (Panther, Panther
Fusion and Tigris), our ThinPrep cytology system, and the Rapid Fetal
Fibronectin Test. Our Aptima family of molecular diagnostic assays is used to
detect, among other things, the infectious microorganisms that cause the common
sexually transmitted diseases, or STDs, such as chlamydia and gonorrhea, or
CTGC, certain high-risk strains of human papillomavirus, or HPV, and Trichomonas
vaginalis, the parasite that causes trichomoniasis. In addition, in 2017 and
2018 we introduced the Aptima quantitative viral load tests for HIV, Hepatitis C
and Hepatitis B. Our assay portfolio also includes diagnostic tests for a range
of acute respiratory infections, including SARS-CoV-2, as well as a test for the
detection of Group B Streptococcus, or GBS, that are run on the Panther Fusion
system, a field upgradeable instrument addition to the base Panther system. In
2020, in response to the COVID-19 global pandemic, we developed and launched the
Aptima SARS-CoV-2 assay (which runs on our standard Panther system) and the
Panther Fusion SARS-CoV-2 assay (which runs on our Panther Fusion system). The
Panther Fusion SARS-CoV-2 assay and the Aptima SARS-CoV-2 assay were launched at
the end of our second quarter and in the third quarter of fiscal 2020,
respectively. The ThinPrep System is primarily used in cytology applications,
such as cervical cancer screening, and the Rapid Fetal Fibronectin Test assists
physicians in assessing the risk of pre-term birth.
Our Breast Health segment offers a broad portfolio of solutions for breast
cancer care for radiology, pathology and surgery. These solutions include breast
imaging and analytics, such as our 2D and 3D digital mammography systems and
reading workstations, minimally invasive breast biopsy guidance systems and
devices, breast biopsy site markers and localization, specimen radiology,
ultrasound and connectivity solutions and breast conserving surgery products.
Our most advanced breast imaging platforms, Selenia Dimensions and 3Dimensions,
utilize a technology called tomosynthesis to produce 3D images that show
multiple contiguous slice images of the breast, which we refer to as the Genius
3D Mammography exam, as well as conventional 2D full field digital mammography
images. With the acquisition of SuperSonic Imagine in the first quarter of
fiscal 2020, we now offer premium ultrasound imaging, further connecting Hologic
capabilities across the continuum of breast care from screening to diagnosis and
treatment.
Our GYN Surgical products include our NovaSure Endometrial Ablation System, or
NovaSure, and our MyoSure Hysteroscopic Tissue Removal System, or MyoSure, as
well as our Fluent Fluid Management system, or Fluent. The NovaSure portfolio is
comprised of the NovaSure CLASSIC and NovaSure ADVANCED devices and involves a
trans-cervical procedure
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for the treatment of abnormal uterine bleeding. The MyoSure suite of devices
offers four options to provide incision-less removal of fibroids, polyps, and
other pathology within the uterus. The Fluent system is a fluid management
system that provides liquid distention during diagnostic and operative
hysteroscopic procedures.
Our Skeletal Health segment's products includes the Horizon DXA, a dual energy
x-ray system, which evaluates bone density and performs body composition
assessments, and the Fluoroscan Insight FD mini C-arm, which assists in
performing minimally invasive orthopedic surgical procedures on a patient's
extremities, such as the hand, wrist, knee, foot, and ankle.
Unless the context otherwise requires, references to we, us, Hologic or our
company refer to Hologic, Inc. and its consolidated subsidiaries.
COVID-19 Considerations
The global COVID-19 pandemic has created significant volatility, uncertainty,
and economic disruption in the markets we sell our products into, primarily the
U.S., Europe and Asia-Pacific. Starting in the second quarter of fiscal 2020,
the spread of COVID-19 negatively impacted business and healthcare activity
globally. In particular, due to government measures, elective procedures and
exams were delayed or cancelled, there were significant reductions in physician
office visits, and hospitals postponed or canceled capital purchases as well as
limited or eliminated services; however, in the second half of the third quarter
of fiscal 2020, we started to see a recovery of elective procedures and exams as
economies were opened back up and restrictions eased, which has continued
through the third quarter of fiscal 2021. The reductions in testing and
procedures had a negative impact on our operating results and cash flows in
fiscal 2020, however, the impact of the commercial release of our COVID-19
assays more than offset those negative impacts as we generated significant
revenue from the sales of these assays starting in the third quarter of fiscal
2020 through the third quarter of fiscal 2021.
While our results of operations and cash flows since the third quarter of fiscal
2020 have been positively impacted by the sale of our COVID-19 assays as well
the continued recovery of our other primary product lines and businesses to
pre-COVID levels, the COVID-19 pandemic could have an adverse impact on our
operating results, cash flows and financial condition in the future. The factors
that could create such adverse impact include: continued demand for COVID-19
testing; competition from existing and new COVID-19 testing technologies and
products as well as the timing and effectiveness of distributing vaccines; the
severity and duration of the COVID-19 pandemic; the resurgence of COVID-19
infections; the emergence of new COVID strain variants; the COVID-19 pandemic's
impact on the U.S. and international healthcare systems, the U.S. economy and
worldwide economy; and the timing, scope and effectiveness of U.S. and
international governmental, regulatory, fiscal, monetary and public health
responses to the COVID-19 pandemic and associated economic disruptions. We
expect that as the current COVID-19 pandemic subsides, there may be a
significantly reduced demand for ongoing testing, and thus, for our COVID-19
assays. As expected in the third quarter of fiscal 2021, revenues generated from
the sale of our COVID-19 assays decreased significantly in the U.S. compared to
the prior year period and the first and second quarters of fiscal 2021 as the
population of vaccinated people continues to grow in the U.S. We expect this
trend to continue in the fourth quarter of fiscal 2021.
In response to the negative impact of COVID-19 on our business, in April 2020,
we initiated cost-cutting measures, which included not only reducing
discretionary and variable spend, such as travel, marketing programs and the use
of contractors, consultants and temporary help, but we also implemented employee
furloughs, salary cuts primarily in the U.S., reduced hours and in certain
instances, employee terminations. Further in April 2020, we shut down certain
manufacturing facilities temporarily and implemented reduced work-week schedules
in response to lower near-term demand for many of our products. As of the end of
the third quarter of fiscal 2020, substantially all of the Company's employee
cost-cutting measures ceased, and the majority of the impacted manufacturing
facilities were back to pre-COVID-19 pandemic levels.
We have also taken and continue to take measures to ensure the safety of our
employees and to comply with governmental orders. These measures could require
that our employees continue to work remotely or otherwise refrain from reporting
to their normal workplace for extended periods of time, which in turn could
result in a decrease in our commercial and marketing activities.
Trademark Notice
Hologic is a trademark of Hologic, Inc. Other trademarks, logos, and slogans
registered or used by Hologic and its divisions and subsidiaries in the United
States and other countries include, but are not limited to, the following:
3Dimensions, 3D Mammography, Acessa, Acessa Health, Acessa ProVu, Affirm, Affirm
Prone, Amplidiag, Alpha Imaging, Aptima, Biotheranostics, Brevera, Clarity HD,
Diagenode, Fluent, Fluoroscan, Genius 3D, Genius 3D Mammography, Health Beacons,
Hologic, Horizon DXA, Insight, Intelligent 2D, LOCalizer, Mobidiag, MyoSure,
Novodiag, NovaSure, NXC Imaging, Panther,
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Panther Fusion, Rapid fFN, Selenia, Selenia Dimensions, SmartCurve, Somatex,
SuperSonic Imagine, ThinPrep, Tigris, and Tumark.
All other brand names or trademarks appearing in this Quarterly Report on Form
10-Q are the property of their respective owners. Hologic's use or display of
other parties' trademarks, trade dress or products in this offering circular
does not imply that Hologic has a relationship with, or endorsement or
sponsorship of, the trademark or trade dress owners.
ACQUISITIONS
The following sets forth descriptions of acquisitions and dispositions we have
completed in fiscal 2021 and 2020.
Mobidiag
On June 17, 2021, we completed the acquisition of Mobidiag Oy, or Mobidiag, for
a purchase price of $729.6 million. Mobidiag, located in Finland, manufactures
molecular diagnostic solutions for gastrointestinal infections, antimicrobial
resistance management and other infections. This acquisition expands our
molecular diagnostics portfolio into the near-patient testing market. Mobidiag's
results of operations are reported in the our Diagnostics segment.
Biotheranostics
On February 22, 2021, we completed the acquisition of Biotheranostics, Inc., or
Biotheranostics, for a purchase price of $231.3 million. Biotheranostics,
located in San Diego, California, manufactures molecular diagnostic tests for
breast and metastatic cancers and performs lab testing procedures at its
facility. Biotheranostics' results of operations are included in our Diagnostics
segment and its revenues are reported within Service and other revenue in our
Consolidated Statements of Income.
Diagenode
On March 1, 2021, we completed the acquisition of Diagenode SA, or Diagenode,
for a purchase price of $155.1 million. Diagenode, located in Belgium, is a
developer and manufacturer of molecular diagnostic assays based on PCR
technology to detect infectious diseases of bacterial, viral or parasite origin.
Diagenode's results of operations are included in our Diagnostics segment.
Somatex Medical Technologies
On December 30, 2020, we completed the acquisition of Somatex Medical
Technologies GmbH, or Somatex, for a purchase price of $62.9 million. Somatex,
located in Germany, is a manufacturer of biopsy site markers, including the
Tumark product line of tissue markers, which we distributed in the U.S. prior to
the acquisition. Somatex's results of operations are included in our Breast
Health segment.

NXC Imaging



On September 28, 2020, we completed the acquisition of assets from NXC Imaging,
for a purchase price of $5.6 million. NXC Imaging was a long-standing
distributor of our Breast and Skeletal products in the U.S. NXC's results of
operations are included in our Breast Health and Skeletal segment, as applicable
to their operations.

Acessa Health

On August 23, 2020, we completed the acquisition of Acessa Health, Inc., or
Acessa, for a purchase price of $161.3 million, which included contingent
consideration and was estimated at $81.8 million as of the measurement date.
Acessa, located in Austin, Texas, manufactures and markets the Acessa ProVu
system, a laparoscopic radio frequency ablation system for use in treatment of
uterine fibroids. Acessa's results of operations are included in our GYN
Surgical segment. The contingent consideration is based on annual incremental
revenue growth over a three-year period ending annually in December. The
contingent consideration is payable after each annual measurement period. We
remeasure the contingent consideration liability on a quarterly basis, and for
the nine months ended we recorded a gain of $10.1 million to decrease the
liability to its fair value. The reduction in fair value was primarily due to a
decrease in forecasted revenues over the measurement period.

Health Beacons


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On February 3, 2020, we completed the acquisition of Health Beacons, Inc., or
Health Beacons, for a purchase price of $19.7 million. Health Beacons
manufactures the LOCalizer product and its results of operations are included in
our Breast Health segment.

Alpha Imaging

On December 30, 2019, we completed the acquisition of assets from Alpha Imaging,
LLC, or Alpha Imaging, for a purchase price of $18.0 million. Alpha Imaging was
a long-standing distributor of our Breast and Skeletal Health products in the
U.S. Alpha Imaging's result of operations are included in our Breast Health and
Skeletal segment, as applicable to their operations.

SuperSonic Imagine



On August 1, 2019, we acquired approximately 46% of the outstanding shares of
SuperSonic Imagine S.A., or SSI, which is headquartered in France. SSI
specializes in ultrasound imaging and designs, and develops and markets an
ultrasound platform used in the non-invasive care path for the characterization
of breast, liver and prostate diseases. We initially accounted for this
investment as an equity method investment.

On November 21, 2019, we acquired an additional 7.6 million shares of SSI for
$12.6 million. As a result, we owned approximately 78% of the outstanding shares
of SSI at November 21, 2019 and controlled SSI's voting interest and operations.
We performed purchase accounting as of November 21, 2019 and beginning on that
date the financial results of SSI are included within our consolidated financial
statements within our Breast Health segment. We remeasured the initial
investment of 46% of the outstanding shares of SSI to its fair value at the
acquisition date, resulting in a gain of $3.2 million recorded in Other income
(expense), net in the first quarter of fiscal 2020.

During the third quarter of fiscal 2021, we acquired the remaining 4.8 million
shares outstanding of SSI for $8.5 million. As of June 26, 2021, we owned 100%
of SSI. Accordingly we have recorded an adjustment to our net income for the
non-controlling interest we did not own of $0.3 million and $1.8 million for the
three and nine months ended June 26, 2021, respectively, and $1.5 million and
$3.4 million for the three and nine months ended June 27, 2020, respectively.

Disposition



On December 30, 2019, we completed the sale of our Medical Aesthetics business.
At the closing, we received cash proceeds of $153.4 million. The sales price was
finalized in the fourth quarter of fiscal 2020, and we repaid $3.4 million,
resulting in a final sales price of $150.0 million. As a result of the sale, we
recorded a $30.2 million impairment charge in the first quarter of fiscal 2020
to record the asset group at fair value less costs to dispose as it met the
assets held-for-sale criteria. For additional information, see Note 6 to our
consolidated financial statements included herein. Following the sale of our
Medical Aesthetics business, we have not generated any further product revenue
related to this business, although additional expenses will be incurred
primarily in connection with the indemnification of legal and tax matters that
existed as of the date of disposition. In addition, we agreed to provide
transition services for a period of up to 15 months, which ended in March 2021.

RESULTS OF OPERATIONS
All dollar amounts in tables are presented in millions.
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Product Revenues

                                                   Three Months Ended                                                      Nine Months Ended
                                     June 26, 2021                     June 27, 2020          Change                    June 26, 2021             June 27, 2020                         Change
                                                            % of                             % of                                                                        % of                               % of
                                                            Total                            Total                                                                       Total                              Total
                                       Amount              Revenue          Amount          Revenue          Amount              %                  Amount              Revenue           Amount           Revenue           Amount             %
Product Revenues
Diagnostics                       $        637.3               54.6  %    $ 528.7               64.2  %    $ 108.6               20.5  %       $      2,793.9               64.7  %    $ 1,149.5               47.3  %    $ 1,644.4            143.1  %
Breast Health                              211.7               18.1  %      111.6               13.6  %      100.1               89.8  %                617.7               14.3  %        506.8               20.9  %        110.9             21.9  %
GYN Surgical                               127.4               10.9  %       51.3                6.2  %       76.1              148.3  %                365.2                8.5  %        275.0               11.3  %         90.2             32.8  %
Skeletal Health                             18.8                1.6  %       10.0                1.2  %        8.8               88.0  %                 52.6                1.2  %         43.5                1.8  %          9.1             20.9  %
Medical Aesthetics                             -                  -  %          -                  -  %          -                  -  %                    -                  -  %         49.7                2.0  %        (49.7)          (100.0) %
                                  $        995.2               85.2  %    $ 701.6               85.3  %    $ 293.6               41.8  %       $      3,829.4               88.7  %    $ 2,024.5               83.3  %    $ 1,804.9             89.2  %


We generated an increase in product revenues in both the current three and nine
month periods of 41.8% and 89.2%, respectively, compared to the corresponding
periods in the prior year primarily due to the significant increase in revenues
in the Diagnostics business, which for the current nine month period was
principally from sales of our two COVID-19 assays, one of which was launched
near the end of the second quarter of fiscal 2020 and the other in the third
quarter of fiscal 2020. Excluding sales of our COVID-19 assays, product revenues
in the prior year periods were adversely impacted by the COVID-19 pandemic, and
product revenues in the current year periods have increased across our
divisions. We primarily attribute this increase to recovery of elective
procedures and exams as economies were opened back up and restrictions eased. In
the current three month period, the increases in product revenues were partially
offset by a reduction in sales of our COVID-19 assays. We attribute this
decrease primarily to reduced testing resulting from the extensive distribution
of vaccines in the U.S. The increase in product revenues in the current nine
month period compared to the corresponding prior year period was partially
offset by no revenues from the Medical Aesthetics business in the current fiscal
year as we disposed of this business segment on December 30, 2019, the beginning
of our second quarter of fiscal 2020.
Diagnostics product revenues increased $108.6 million and $1,644.4 million, or
20.5% and 143.1%, respectively, in the current three and nine month periods
compared to the corresponding periods in the prior year primarily due to
increases in Molecular Diagnostics of $52.2 million and $1,585.9 million,
respectively, and increases in Cytology & Perinatal of $51.5 million and $58.4
million, respectively. Blood Screening product revenue increased $4.9 million in
the current three month period and was flat in the current nine month period
compared to the corresponding periods in the prior year. While we divested our
Blood Screening business in the second quarter of fiscal 2017, we continue to
provide long-term access to Panther instrumentation and certain supplies to the
purchaser of that business. Molecular Diagnostics product revenue was $511.1
million and $2,410.6 million, respectively, in the current three and nine month
periods compared to $459.0 million and $824.7 million in the corresponding
periods in the prior year. The increase in the current three month period
compared to the corresponding period in the prior year was primarily
attributable to sales of our Aptima assays (exclusive of our Aptima SARS-CoV-2
assay), which primarily consist of our CTGC, HPV and Trichomonas vaginalis
assays, on a worldwide basis, as well as an increase in collection kits due to a
return to pre-COVID testing levels and the prior year periods sales were
adversely impacted due to the COVID-19 pandemic and related lockdowns across the
globe. These increases were partially offset by a decrease in revenue from our
two SARS-CoV-2 assays in the U.S. in the current quarter compared to the
corresponding period in the prior year as volumes declined and to a lesser
extent average sales prices declined, as well as lower sales of Panther
instruments. Sales of our COVID-19 assays declined to $291.2 million in the
current three month period compared to $324.0 million in the corresponding
period in the prior year. We primarily attribute this decline to lower COVID-19
testing in the U.S. resulting from the continued distribution of vaccines and
higher inventory levels at our laboratory customers. This decline was partially
offset by increased international revenues, as the distribution of vaccines has
been slower outside of the U.S. The increase in the current nine month period
compared to the corresponding period in the prior year was primarily
attributable to sales of our COVID-19 assays, which increased to $1,716.2
million in the current nine month period compared to $328.1 million in the
corresponding period in the prior year, an increase in our Aptima assays, an
increase in collection kits and Panther and Panther Fusion instrument sales
primarily due to demand for increased testing capacity for COVID-19. However, we
do expect that sales of our COVID-19 assays will continue to decline, primarily
in the U.S. in the fourth quarter of fiscal 2021 compared to the current quarter
due to the continued distribution of vaccines and higher inventory levels at our
laboratory customers. Cytology & Perinatal product revenue increased in the
current three and nine month periods compared to the corresponding periods in
the prior year primarily due to higher ThinPrep test volumes in the U.S. and
Asia-Pacific, which we primarily attribute to the recovery of wellness office
visits that had previously been delayed or cancelled in response to the COVID-19
pandemic, and the prior year periods sales were adversely impacted due to the
COVID-19 pandemic and related
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lockdowns across the globe, partially offset by lower average selling prices and
lower Perinatal product volumes. The inclusion of Diagenode contributed $10.1
million and $13.6 million of product revenue in the current three and nine month
periods, respectively. We also experienced an increase in revenue from the
favorable foreign currency exchange impact of the weakened U.S. dollar against a
number of currencies in both the current three and nine month periods.
Breast Health product revenues increased $100.1 million and $110.9 million, or
89.8% and 21.9%, respectively, in the current three and nine month periods
compared to the corresponding periods in the prior year as product revenues in
the prior year periods were adversely impacted by the COVID-19 pandemic and
related lockdowns across the globe. These increases were primarily due to an
increase in sales volume of our digital mammography systems and related workflow
products (primarily Intelligent 2D, Clarity HD and SmartCurve), Affirm Prone
breast biopsy tables, and our interventional breast solutions products,
primarily Eviva, ATEC, and Brevera disposables (relaunched in the fourth quarter
of fiscal 2020). In addition, we had higher sales of our breast conserving
surgery products and ultrasound imaging products. We primarily attribute the
increase in revenues to hospitals and imaging centers purchasing capital
equipment to fulfill their budgets and demand has increased in sequential
quarters, which we attribute to the recovery of elective procedures and exams as
elective procedures and wellness visits have recovered from the initial
cancellation and deferrals due to the COVID-19 pandemic in fiscal 2020. We also
experienced an increase in revenue from the favorable foreign currency exchange
impact of the weakened U.S. dollar against a number of currencies in both the
current three and nine month periods.
GYN Surgical product revenues increased $76.1 million and $90.2 million, or
148.3% and 32.8 %, respectively, in the current three and nine month periods
compared to the corresponding periods in the prior year primarily due to the GYN
Surgical business recovering as a result of the recovery of elective medical
visits and procedures that had previously been delayed or cancelled in response
to the COVID-19 pandemic and to a lesser extent healthcare providers increasing
their inventory levels to ensure there are no supply constraints. These
increases were primarily due to increases in the sales volume of MyoSure
systems, NovaSure systems, Fluent Fluid Management systems and to a lesser
extent sales of ProVu systems, acquired in the Acessa acquisition in the fourth
quarter of fiscal 2020. We also experienced an increase in revenue from the
favorable foreign currency exchange impact of the weakened U.S. dollar against a
number of currencies.
Skeletal Health product revenues increased $8.8 million and $9.1 million, or
88.0% and 20.9%, respectively, in the current three and nine month periods
compared to the corresponding periods in the prior year primarily due to an
increase in sales volume of both our Insight FD mini C-arm and Horizon DXA
systems. We primarily attribute this increase to the increase in wellness visits
and healthcare screenings in 2021 as a result of the ongoing recovery from the
COVID-19 pandemic.
We divested the Medical Aesthetics segment on December 30, 2019, the beginning
of our second quarter of fiscal 2020.
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Product revenues by geography as a percentage of total product revenues were as
follows:
                              Three Months Ended                        Nine Months Ended
                       June 26, 2021        June 27, 2020       June 26,

2021 June 27, 2020


    United States               61.7  %            80.2  %               67.4  %            76.3  %
    Europe                      26.4  %            12.7  %               23.0  %            13.8  %
    Asia-Pacific                 8.1  %             5.1  %                6.3  %             6.4  %
    Rest of World                3.8  %             2.0  %                3.3  %             3.5  %
                               100.0  %           100.0  %              100.0  %           100.0  %


In the current three and nine month periods compared to the corresponding
periods in the prior year, the percentage of product revenue derived from the
U.S. decreased while Europe increased, which we primarily attributed to strong
sales of our SARS-CoV-2 assays in Europe and growth in our Aptima assays in
Europe as we expanded our customer base and increased sales from the adoption of
co-testing for cervical cancer screening in Germany and to a lesser extent in
the UK. Asia-Pacific product revenue as a percentage of total product revenue
increased in the current three month period compared to the corresponding period
in the prior year primarily due to an increase in sales of our SARS-CoV-2 assays
in the region, an increase in sales of our mammography systems and growth in
ThinPrep and Molecular Diagnostics primarily due to the recovery of wellness
office visits that had previously been delayed or cancelled in response to the
COVID-19 pandemic.
Service and Other Revenues

                                                                Three Months Ended                                                                                                   Nine Months Ended
                              June 26, 2021                             June 27, 2020                           Change                            June 26, 2021                             June 27, 2020                           Change
                                             % of                                      % of                                                                      % of                                      % of
                                             Total                                     Total                                                                     Total                                     Total
                       Amount               Revenue              Amount               Revenue           Amount             %               Amount               Revenue              Amount               Revenue           Amount             %
Service and Other
Revenues           $      173.1                14.8  %       $      121.3                14.7  %       $ 51.8            42.7  %       $      486.3                11.3  %       $      405.0                16.7  %       $ 81.3            20.1  %


Service and other revenues consist primarily of revenue generated from our field
service organization to provide ongoing service, installation, and repair of our
products. The majority of these revenues are generated within our Breast Health
segment. The increase in service and other revenue in the current three and nine
month periods compared to the corresponding periods in the prior year was
primarily due to an increase in Breast Health service contract revenue as the
Breast Health business continued to convert a high percentage of our installed
base of digital mammography systems to service contracts upon expiration of the
warranty period, as well as additions from our distributor acquisitions. We also
experienced an increase in spare parts revenue in the current three and nine
month periods for services that had previously been delayed or cancelled due to
the COVID-19 pandemic. In our Diagnostics business, we had additional royalty
revenue in the current three and nine month periods of $9.8 million, and $32.6
million, respectively, from Grifols related to licensing our intellectual
property to our COVID-19 assays for their sale in Spain. In addition, the
inclusion of Biotheranostics added $13.2 million and $17.2 million in the
current three and nine month periods, respectively. These increases were
partially offset by the sale of the Medical Aesthetics business which
contributed $15.6 million of revenue in the prior year nine month period.
Cost of Product Revenues

                                                                      Three Months Ended                                                                                                     Nine Months Ended
                                   June 26, 2021                             June 27, 2020                            Change                            June 26, 2021                              June 27, 2020                             Change
                                                  % of                                      % of                                                                        % of                                      % of
                                                 Product                                   Product                                                                     Product                                   Product
                            Amount               Revenue              Amount               Revenue           Amount             %                 Amount               Revenue              Amount               Revenue            Amount              %
Cost of Product
Revenues                $      303.9                30.5  %       $      225.1                32.1  %       $ 78.8             35.0  %       $       889.1                23.2  %       $      685.9                33.9  %       $ 203.2              29.6  %
Amortization of
Intangible Assets               68.1                 6.8  %               62.9                 9.0  %          5.2              8.3  %               194.2                 5.1  %              189.4                 9.4  %           4.8               2.5  %
Impairment of
Intangible Assets and
Equipment                          -                   -  %                  -                   -  %            -                -  %                   -                   -  %               25.8                 1.3  %         (25.8)           (100.0) %
                        $      372.0                37.3  %       $      288.0                41.1  %       $ 84.0             29.3  %       $     1,083.3                28.3  %       $      901.1                44.5  %       $ 182.2              20.2  %


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Cost of Product Revenues. The cost of product revenues as a percentage of
product revenues was 30.5% and 23.2% in the current three and nine month
periods, respectively, compared to 32.1% and 33.9% in the corresponding periods
in the prior year, respectively. Cost of product revenues as a percentage of
revenue decreased in the current three and nine month periods primarily due to
sales of our SARS-CoV-2 assays, which have higher gross margins compared to our
other diagnostic products, and comprised 29.3% and 44.8% of total product
revenue in the current three and nine month periods, respectively, compared to
46.2% and 16.2% in the corresponding periods in the prior year, respectively.
Also benefiting gross margin in the current year period was higher sales volumes
from our other businesses and product lines as they have continued to recover
from the COVID-19 pandemic as economies opened back up and restrictions eased
and the disposition of Medical Aesthetics, which had lower gross margins
compared to our remaining businesses. Partially offsetting these decreases were
higher field service costs for our expanded instrument installed base for the
Diagnostics business and higher freight costs.
Diagnostics' product costs as a percentage of revenue increased in the current
three month period compared to the corresponding period in the prior year
primarily due to lower sales of our SARS-CoV-2 assays, an increase in reserves,
higher field service costs for our expanded instrument installed base, increased
amortization of placed instruments, higher freight charges and a slight decline
in average selling prices. These increases were partially offset by increased
volumes of our Aptima assays and ThinPrep Pap Test. Diagnostics' product costs
as a percentage of revenue decreased in the current nine month period compared
to the corresponding period in the prior year primarily due to higher sales of
our SARS-CoV-2 assays and higher overall production of our Aptima assays and
ThinPrep Pap Test reducing fixed overhead on a unit basis, partially offset by
higher field service costs for our expanded instrument installed base, freight
charges, inventory reserves and a slight decline in average selling prices.
Breast Health's product costs as a percentage of revenue decreased in the
current three and nine month periods compared to the corresponding periods in
the prior year primarily due to the impact of the COVID-19 pandemic in the prior
year periods, which resulted in decreased sales volume across the majority of
our product lines, period costs for temporary facility shut-downs and reduced
manufacturing utilization and increased inventory reserves. In the current three
and nine month periods sales volumes have increased for our higher margin
3Dimensions systems, higher-margin workflow products, consisting of Intelligent
2D, Clarity HD and SmartCurve upgrades, and our breast biopsy and breast
conserving surgery disposable products.
GYN Surgical's product costs as a percentage of revenue decreased in the current
three and nine month periods compared to the corresponding periods in the prior
year primarily due to the impact of the COVID-19 pandemic in the prior year
periods, which resulted in significant decreases in sales volume of our NovaSure
and MyoSure devices, period costs for the temporary shutdown of our
manufacturing facility and reduced manufacturing utilization. In the current
three and nine month periods, the Surgical business has recovered to which
significantly improved margins, partially offset by product mix of higher
volumes of lower margin products, including our Fluent Fluid Management systems
and ProVu systems, acquired in the Acessa acquisition.
Skeletal Health's product costs as a percentage of revenue decreased in the
current three and nine month periods compared to the corresponding periods in
the prior year due to higher sales volume of both our Insight FD mini C-arm and
Horizon DXA systems and higher inventory reserves in the prior year periods.
We divested the Medical Aesthetics segment on December 30, 2019, the beginning
of our second quarter of fiscal 2020.
Amortization of Intangible Assets. Amortization of intangible assets relates to
acquired developed technology, which is generally amortized over its estimated
useful life of between 5 and 15 years using a straight-line method or, if
reliably determinable, based on the pattern in which the economic benefits of
the assets are expected to be consumed. Amortization expense increased in the
current three and nine month periods compared to the corresponding periods in
the prior year primarily due to intangible assets acquired in the
Biotheranostics, Diagenode, Somatex and Acessa acquisitions, partially offset by
lower amortization of intangible assets acquired in the Cytyc acquisition which
reduces over time.
Impairment of Intangible Assets and Equipment. As discussed in Note 6 to the
consolidated financial statements, we recorded an aggregate impairment charge of
$30.2 million during the first quarter of fiscal 2020. The impairment charge was
allocated to the Medical Aesthetics long-lived assets, of which $25.8 million
was allocated to developed technology assets and written off to cost of
revenues.
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Cost of Service and Other Revenues

                                                             Three Months Ended                                                                                                 Nine Months Ended
                           June 26, 2021                            June 27, 2020                           Change                           June 26, 2021                            June 27, 2020                           Change
                                           % of                                     % of                                                                     % of                                     % of
                                         Service                                  Service                                                                  Service                                  Service
                     Amount              Revenue              Amount              Revenue           Amount             %               Amount              Revenue              Amount              Revenue           Amount             %
Cost of Service
and Other
Revenue          $       94.7               54.7  %       $       68.8               56.8  %       $ 25.9            37.6  %       $      264.7               54.4  %       $      232.7               57.5  %       $ 32.0            13.8  %


Service and other revenues gross margin increased to 45.3% and 45.6%,
respectively, in the current three and nine month periods compared to 43.2% and
42.5%, respectively, in the corresponding periods in the prior year. The
increase in the current year periods was primarily due to additional royalty
revenue from Grifols related to licensing our intellectual property related to
our COVID-19 assays for their sale in Spain, which has a high margin. In
addition, in the current year periods the Breast Health business had an increase
in service contract revenue which benefited gross margin as service contract
revenue has higher margins compared to revenue from spare parts, installation
and training.
Operating Expenses

                                                                       Three Months Ended                                                                                                    Nine Months Ended
                                    June 26, 2021                             June 27, 2020                            Change                            June 26, 2021                             June 27, 2020                             Change
                                                   % of                                      % of                                                                       % of                                      % of
                                                   Total                                     Total                                                                      Total                                     Total
                             Amount               Revenue             

Amount               Revenue           Amount             %                Amount               Revenue              Amount               Revenue            Amount              %
Operating Expenses
Research and development $       69.0                 5.9  %       $       55.1                 6.7  %       $ 13.9             25.2  %       $      199.8                 4.6  %       $      165.5                 6.8  %       $  34.3              20.7  %
Selling and marketing           142.7                12.2  %              103.5                12.6  %         39.2             37.9  %              402.2                 9.3  %              359.0                14.8  %          43.2              12.0  %
General and
administrative                  117.3                10.0  %              105.3                12.8  %         12.0             11.4  %              297.7                 6.9  %              259.9                10.7  %          37.8              14.5  %
Amortization of
intangible assets                10.4                 0.9  %               10.2                 1.2  %          0.2              2.0  %               30.7                 0.7  %               29.5                 1.2  %           1.2               4.1  %
Impairment of intangible
assets and equipment                -                   -  %                  -                   -  %            -                -  %                  -                   -  %                4.4                 0.2  %          (4.4)           (100.0) %

Contingent consideration
- fair value adjustment             -                   -  %                  -                   -  %            -                -  %              (10.1)               (0.2) %                0.4                   -  %         (10.5)                  **
Restructuring and
Divestiture charges               3.6                 0.3  %                1.0                 0.1  %          2.6            260.0  %                6.6                 0.2  %                4.8                 0.2  %           1.8              37.5  %
                         $      343.0                29.4  %       $      275.1                33.4  %       $ 67.9             24.7  %       $      926.9                21.5  %       $      823.5                33.9  %       $ 103.4              12.6  %


**Percentage not meaningful
Research and Development Expenses. Research and development expenses increased
25.2% and 20.7% in the current three and nine month periods compared to the
corresponding periods in the prior year primarily due to higher R&D project
spend in Diagnostics, Breast Health and Surgical, the inclusion of expenses from
the Acessa, Biotheranostics, Diagenode and Somatex acquisitions, higher
consulting spending and increased spending to implement the European Medical
Device Regulation (MDR) and In Vitro Diagnostic Regulation (IVDR) requirements.
In the current nine month period, we recorded a $7.0 million charge related to
the purchase of intellectual property in Breast Health. Partially offsetting
these increases in the current nine month period was the reduction of expense
due to the disposition of the Medical Aesthetics business which contributed $7.3
million of expense in the prior year nine month period. In addition, in the
current three and nine month periods we recorded a credit to research and
development expenses of $2.4 million and $10.1 million, respectively, from the
Biomedical Advanced Research and Development Authority (BARDA) in connection
with a grant to expand manufacturing capacity and obtain FDA approval of our
SARS-CoV-2 assays compared to a credit of $4.7 million in the prior year three
and nine month periods. At any point in time, we have a number of different
research projects and clinical trials being conducted and the timing of these
projects and related costs can vary from period to period.
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Selling and Marketing Expenses. Selling and marketing expenses increased 37.9%
and 12.0% in the current three and nine months periods, respectively, compared
to the corresponding periods in the prior year primarily due to an increase in
commissions in Breast Health, Surgical and Diagnostics from higher revenues, an
increase in marketing initiatives and consulting spending, and the inclusion of
expenses in the aggregate from the Acessa, Biotheranostics, Diagenode and
Somatex acquisitions of $12.2 million and $20.9 million in the current three and
nine month periods, respectively. Partially offsetting these increases in the
current nine month period was the disposition of the Medical Aesthetics business
which contributed $23.7 million of expense in the prior year nine month period,
lower travel expenses in response to the COVID pandemic and decreases in meeting
expenses primarily related to cancelling our national sales meeting and not
having an in-person RSNA conference as a result of the COVID pandemic.
General and Administrative Expenses. General and administrative expenses
increased 11.4% and 14.5% in the current three and nine month periods,
respectively, compared to the corresponding periods in the prior year primarily
due to the inclusion of expenses from the Acessa, Biotheranostics, Diagenode and
Somatex acquisitions, increased acquisition transaction costs including $11.5
million for a transfer tax related to the Mobidiag acquisition, higher
litigation and settlement costs, increased consulting spend for corporate
initiatives and information system implementation projects, higher salary
expenses due to pay reductions and furloughs implemented in April 2020 due to
the COVID pandemic, and lower credits in the current year periods of $5.7
million and $3.5 million, respectively, related to transition services provided
to Cynosure, partially offset by lower bonus and stock-based compensation, and
lower bad debt expense. In the current three month period, we had lower
charitable donations. In the current nine month period, we had higher expense
from our deferred compensation plan, partially offset by the disposition of the
Medical Aesthetics business, which contributed $5.5 million of expenses in the
prior year period, expenses incurred to separate and dispose of that business,
and a $3.3 million benefit due to reversal of a tax reserve.
Amortization of Intangible Assets. Amortization of intangible assets results
from customer relationships, trade names, distributor relationships and business
licenses related to our acquisitions. These intangible assets are generally
amortized over their estimated useful lives of between 2 and 30 years using a
straight-line method or, if reliably determinable, based on the pattern in which
the economic benefits of the assets are expected to be consumed utilizing
expected undiscounted future cash flows. Amortization expense was relatively
consistent in both periods compared to the prior year periods as we had
increases from recent acquisitions offset by assets from older acquisitions
becoming fully amortized.
Contingent Consideration Fair Value Adjustments. In connection with the
acquisition of Acessa, we are obligated to make contingent earn-out payments.
The payments are based on achieving incremental revenue growth over a three-year
period ending annually in December. As of the acquisition date for Acessa, we
recorded a contingent consideration liability for the estimated fair value of
the amount we expected to pay to the former shareholders of the acquired
business. This liability is not contingent on future employment, and we recorded
our estimate of the fair value of the contingent consideration liability
utilizing the Monte Carlo simulation based on future revenue projections of
Acessa, comparable companies revenue growth rates, implied volatility and
applying a risk adjusted discount rate. Increases or decreases in the fair value
of contingent consideration liabilities can result from the passage of time,
changes in discount rates, and changes in the timing, probabilities and amount
of revenue estimates. No adjustment was made to the liability in the current
quarter, and for the current nine month period we recorded a gain of $10.1
million to decrease the liability to its fair value. The reduction in fair value
was primarily due to a decrease in forecasted revenues over the measurement
period.
Impairment of Intangible Assets. As discussed in Note 6 to the consolidated
financial statements, we recorded an aggregate impairment charge of $30.2
million during the first quarter of fiscal 2020. The impairment charge was
allocated to the Medical Aesthetics long-lived assets of which $4.4 million was
written off to operating expenses.
Restructuring and Divestiture Charges. We have implemented various cost
reduction initiatives to align our cost structure with our operations and
related integration activities. These actions have primarily resulted in the
termination of employees. As a result, we recorded charges of $3.6 million and
$6.6 million in the current three and nine month periods, respectively, and $1.0
million and $4.8 million in the corresponding prior year periods, respectively,
primarily related to severance benefits.
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Interest Expense

                                     Three Months Ended                                    Nine Months Ended
                       June 26,      June 27,                               June 26,      June 27,
                         2021          2020              Change               2021          2020              Change
                        Amount        Amount       Amount         %          Amount        Amount       Amount         %

   Interest Expense   $  (21.6)     $  (27.4)     $  5.8       (21.2) %    $  (70.9)     $  (91.5)     $ 20.6       (22.5) %



Interest expense consists primarily of the cash interest costs and the related
amortization of the debt discount and deferred issuance costs on our outstanding
debt. Interest expense in the current three and nine month periods decreased
primarily due to a decrease in LIBOR year over year, the basis for determining
interest expense under our 2018 Credit Agreement, lower interest rates on our
Senior Notes due to issuing our 2029 Senior Notes and paying off our 2025 Senior
Notes, and the pay-off of amounts outstanding under our accounts receivable
asset securitization agreement in the prior year, partially offset by issuance
costs expensed from the issuance of the 2029 Senior Notes and higher interest
rate swap expenses.
Debt Extinguishment Loss

                                                   Three Months Ended                                                      Nine Months Ended
                             June 26,           June 27,                                            June 26,           June 27,
                               2021               2020                     Change                     2021               2020                      Change
                              Amount             Amount            Amount              %             Amount             Amount            Amount              %

Debt Extinguishment Loss $ - $ - $ -


            -  %       $  (21.6)         $       -          $ (21.6)            100.0  %



In the first quarter of 2021, we completed a private placement of $950 million
aggregate principal amount of our 2029 Senior Notes. The proceeds under the 2029
Senior Notes offering, together with available cash, were used to redeem our
2025 Senior Notes in the same principal amount. In connection with this
transaction, we recorded a debt extinguishment loss of $21.6 million in the
first quarter of fiscal 2021.
Other Income (Expense), net

                                               Three Months Ended                                                        Nine Months Ended
                          June 26,           June 27,                                             June 26,           June 27,
                            2021               2020                     Change                      2021               2020                      Change
                           Amount             Amount           Amount              %               Amount             Amount            Amount              %
Other Income (Expense),
net                     $     0.1          $     4.3          $ (4.2)            (97.7) %       $     1.1          $     0.1          $   1.0            1,000.0  %



For the current three month period, this account primarily consisted of a gain
of $3.4 million on the cash surrender value of life insurance contracts related
to our deferred compensation plan driven by stock market gains, partially offset
by net foreign currency exchange losses of $3.9 million, primarily from the
mark-to-market of outstanding forward foreign currency exchange and foreign
currency option contracts. For the third quarter of fiscal 2020, this account
primarily consisted of a gain of $5.8 million on the cash surrender value of
life insurance contracts, partially offset by net foreign currency exchange
losses of $1.4 million, primarily from the mark-to-market and settling of
outstanding forward foreign currency exchange and foreign currency option
contracts.

For the current nine month period, this account primarily consisted of a gain of
$12.2 million on the cash surrender value of life insurance contracts related to
our deferred compensation plan, partially offset by net foreign currency
exchange losses of $11.4 million, primarily from the mark-to-market and settling
of outstanding forward foreign currency exchange and foreign currency option
contracts. For the prior year corresponding nine month period, this account
primarily consisted of net foreign currency exchange losses of $3.1 million
primarily from mark-to-market of outstanding forward foreign currency and
foreign currency option exchange contracts, partially offset by a net gain of
$3.2 million to reflect an adjustment to remeasure our initial investment in SSI
in connection with purchase accounting.
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Provision (Benefit) for Income Taxes

                                              Three Months Ended                                                      Nine Months Ended
                         June 26,           June 27,                                            June 26,          June 27,
                           2021               2020                     Change                     2021              2020                     Change
                          Amount             Amount           Amount              %              Amount            Amount            Amount             %
Provision (Benefit)
for Income Taxes       $    69.4          $    32.0          $ 37.4             116.9  %       $  409.6          $ (232.1)         $ 641.7                  **


**Percentage not meaningful

Our effective tax rate for the three and nine months ended June 26, 2021 was a
provision of 20.6% and 21.0%, respectively, compared to a provision of 19.0% and
a net benefit of 60.3%, respectively, for the corresponding periods in the prior
year.
Our effective tax rate for the three months ended June 26, 2021 was lower than
the U.S. statutory tax rate primarily due to the impact of the U.S. deduction
for foreign derived intangible income and the geographic mix of income earned by
our international subsidiaries, which are taxed at rates lower than the U.S.
statutory tax rate, and federal and state tax credits, partially offset by state
income taxes. Our effective tax rate for the nine months ended June 26, 2021 was
equal to the U.S. statutory tax rate as the impact of the U.S. deduction for
foreign derived intangible income and the geographic mix of income earned by our
international subsidiaries, which are taxed at rates lower than the U.S.
statutory tax rate, were offset by state income taxes.
Our effective tax rate for the three months ended June 27, 2020 was lower than
the U.S. statutory tax rate primarily due to the geographic mix of income earned
by our international subsidiaries which are taxed at rates lower than the U.S.
statutory tax rate, including the impact of the U.S. tax imposed on global
intangible low-taxed income and the U.S. deduction for foreign derived
intangible income, and reserve releases resulting from statute of limitations
expirations, partially offset by unbenefited foreign losses. Our effective tax
rate for the nine months ended June 27, 2020 differed from the statutory tax
rate primarily due to a $312.8 million discrete net tax benefit related to the
loss on the sale of the Medical Aesthetics business.

Segment Results of Operations
We operate in four segments: Diagnostics, Breast Health, GYN Surgical and
Skeletal Health. Until December 30, 2019, our product portfolio included
aesthetic and medical treatments systems sold by our former Medical Aesthetic
business. We completed the disposition of the Medical Aesthetics segment on
December 30, 2019 (the first day of the second quarter of fiscal 2020). The
accounting policies of the segments are the same as those described in the Notes
to the Consolidated Financial Statements included in our Annual Report on Form
10-K for the fiscal year ended September 26, 2020. We measure segment
performance based on total revenues and operating income (loss). Revenues from
product sales of each of these segments are described in further detail above.
The discussion that follows is a summary analysis of total revenues and the
primary changes in operating income or loss by segment.
Diagnostics

                                                Three Months Ended                                                      Nine Months Ended
                           June 26,         June 27,                                             June 26,           June 27,
                             2021             2020                     Change                      2021               2020                       Change
                            Amount           Amount           Amount              %               Amount             Amount             Amount               %
Total Revenues            $ 665.5          $ 532.2          $ 133.3              25.0  %       $ 2,858.2          $ 1,163.2          $ 1,695.0             145.7  %
Operating Income          $ 260.1          $ 233.9          $  26.2              11.2  %       $ 1,745.1          $   340.7          $ 1,404.4             412.2  %
Operating Income as a %
of Segment Revenue           39.1  %          43.9  %                                               61.1  %            29.3  %


Diagnostics revenues increased in the current three and nine month periods
compared to the corresponding periods in the prior year primarily due to the
increase in product revenues from the recovery of our core product lines and
current year acquisitions, and an increase in royalty revenue from Grifols
related to licensing our intellectual property to our COVID-19 assays for their
sale in Spain. In addition, revenues were higher in the current nine month
period from the introduction of our SARS-CoV-2 assays in the prior year, however
revenue from our COVID-19 assays were lower in the current three month period
due to a decline in volume in the U.S. as discussed above,
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Operating income for this business segment increased in the current three and
nine month periods compared to the corresponding periods in the prior year due
to an increase in gross profit from higher revenues, partially offset by an
increase in operating expenses. Gross margin was 62.5% and 74.9% in the current
three and nine month periods, respectively, compared to 64.9% and 55.8% in the
corresponding periods in the prior year, respectively. The increase in gross
profit in the current three and nine month periods was primarily due to sales of
our Aptima assays and ThinPrep Pap Test, partially offset by an increase in
freight costs to ship product internationally, an increase in inventory
reserves, higher field service costs and an increase in amortization of placed
Panther instruments as the installed base has increased significantly year over
year. In addition, gross profit in the current nine month period was higher due
to sales volume of our SARS-CoV-2 assays, however, in the current three month
period the increase in gross profit was partially offset by lower volumes of our
SARS-CoV-2 assays.

Operating expenses increased in the current three and nine month periods
compared to the corresponding periods in the prior year primarily due to higher
compensation and benefits driven by our deferred compensation plan and salary,
an increase in headcount in the operations and sales departments, an increase in
marketing initiatives, an increase in R&D project spend, a lower BARDA credit of
$2.3 million in the current three month period, higher acquisition transaction
expenses, which included $11.5 million for a transfer tax related to the
Mobidiag acquisition, and additional expenses from the Biotheranostics and
Diagenode acquisitions. In addition, in the current nine month period we had
higher bad debt expense. These increases were partially offset by a higher BARDA
credit of $5.4 million in the current nine month period, lower bonus expense and
a decrease in spending for travel.

Breast Health

                                                Three Months Ended                                                    Nine Months Ended
                           June 26,         June 27,                                             June 26,          June 27,
                             2021             2020                     Change                      2021              2020                     Change
                            Amount           Amount           Amount              %               Amount            Amount           Amount              %
Total Revenues            $ 349.0          $ 224.0          $ 125.0              55.8  %       $ 1,018.0          $ 862.8          $ 155.2              18.0  %
Operating Income          $  81.0          $ (11.1)         $  92.1                   **       $   235.1          $ 158.6          $  76.5              48.2  %
Operating Income as a %
of Segment Revenue           23.2  %          (5.0) %                                               23.1  %          18.4  %


**Percentage not meaningful
Breast Health revenues increased in the current three and nine month periods
compared to the corresponding periods in the prior year primarily due to an
increase of $100.1 million and $110.9 million in product revenue, respectively,
discussed above and an increase of $24.9 and $44.4 million in service revenue,
respectively. The increase in service revenue in the current three and nine
month periods was primarily due to an increase in service contract revenue as
the Breast Health business continued to convert a high percentage of our
installed base of digital mammography systems to service contracts upon
expiration of the warranty period, the addition of service contracts from the
NXC Imaging acquisition and an increase in spare parts revenue.

Operating income for this business segment increased in the current three and
nine month periods compared to the corresponding periods in the prior year
primarily due to an increase in gross profit from higher product and service
revenues, partially offset by an increase in operating expenses. Gross margin
was 56.9% in both the current three and nine month periods compared to 45.4% and
53.5% in the corresponding periods in the prior year, respectively. The increase
in gross profit was primarily due to the increase in product revenue and service
revenue discussed above, partially offset by a charge of $2.3 million related to
the impact of stepping-up the acquired inventory to fair value in purchase
accounting for the Somatex acquisition. In addition, gross profit in the
corresponding prior year periods was impacted by the COVID-19 pandemic, which
resulted in decreased sales volume across the majority of our product lines,
period costs for temporary facility shut-downs and reduced manufacturing
utilization and increased inventory reserves.

Operating expenses increased in the current three and nine month periods
compared to the corresponding periods in the prior year primarily due to higher
compensation and benefits driven by higher commissions from increased sales and
our deferred compensation plan, a $7.0 million charge related to the purchase of
intellectual property in the current quarter, an increase in R&D project spend,
an increase in marketing initiatives and an increase in consulting spend. These
increases were partially offset by lower bonus expense, a decrease in travel,
meetings, trade show expenses and bad debt expense. The increase in the current
nine month period is also a result of the corresponding prior year period
including a benefit from the reversal of acquisition related accruals and a
holdback.
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GYN Surgical

                                               Three Months Ended                                                   Nine Months Ended
                           June 26,         June 27,                                           June 26,         June 27,
                             2021             2020                    Change                     2021             2020                    Change
                            Amount           Amount          Amount              %              Amount           Amount          Amount              %
Total Revenues            $ 127.9          $  51.5          $ 76.4             148.4  %       $ 366.2          $ 275.9          $ 90.3              32.7  %
Operating Income          $  18.2          $ (23.4)         $ 41.6                   **       $  60.5          $  32.0          $ 28.5              89.1  %
Operating Income as a %
of Segment Revenue           14.2  %         (45.4) %                                            16.5  %          11.6  %


**Percentage not meaningful
GYN Surgical revenues increased in the current three and nine month periods
compared to the corresponding periods in the prior year primarily due to the
increase in product revenues discussed above.
Operating income for this business segment increased in the current three and
nine month periods compared to the corresponding periods in the prior year
primarily due to an increase in gross profit from higher revenues, partially
offset by an increase in operating expenses. Gross margin was 62.5% and 61.6% in
the current three and nine month periods, respectively, compared to 36.7% and
59.2% in the corresponding periods in the prior year, respectively. The increase
in gross margin was primarily due to the increased sales volume in the current
year periods as the GYN Surgical business recovered to pre-COVID levels and the
impact of the COVID-19 pandemic on the prior year periods, which resulted in
decreased sales volume across the majority of our product lines, period costs
for temporary facility shut-downs and reduced manufacturing utilization and
increased inventory reserves. The increase in gross margin was partially offset
by unfavorable product mix discussed above and higher intangible asset
amortization expense from the Acessa acquisition.
Operating expenses increased in the current three and nine month periods
compared to the corresponding periods in the prior year primarily due to the
inclusion in of Acessa expenses of $3.7 million and $11.6 million, respectively,
increased spending on research and development projects, higher marketing
initiative spend, higher consulting spend, higher compensation and benefits
driven by our deferred compensation plan and higher commissions from the
increase in sales, partially offset by a gain of $10.1 million in the current
nine month period related to the fair value adjustments for contingent
consideration related to the Acessa acquisition.
Skeletal Health

                                               Three Months Ended                                                   Nine Months Ended
                           June 26,         June 27,                                           June 26,         June 27,
                             2021             2020                    Change                     2021             2020                    Change
                            Amount           Amount          Amount              %              Amount           Amount          Amount              %
Total Revenues            $  25.9          $  15.2          $ 10.7              70.4  %       $  73.3          $  62.3          $ 11.0              17.7  %
Operating Income          $  (0.7)         $  (7.4)         $  6.7              90.5  %       $   0.1          $  (4.8)         $  4.9

**


Operating Income as a %
of Segment Revenue           (2.7) %         (48.7) %                                             0.1  %          (7.7) %


**Percentage not meaningful
Skeletal Health revenues increased in the current three and nine month periods
compared to the corresponding periods in the prior year primarily due to the
change in product revenues discussed above.
Operating income for this business segment increased in the current three and
nine month periods compared to the corresponding periods in the prior year
primarily due to an increase in gross profit from higher revenues. Gross margin
was 28.5% and 33.1% in the current three and nine month periods, respectively,
compared to 2.8% and 31.2% in the corresponding periods in the prior year,
respectively. The increase in gross margin was primarily due to higher sales
volume of our products and higher inventory reserves in the prior year periods.
Operating expenses were consistent in the current three and nine month periods
compared to the corresponding periods in the prior year.
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Medical Aesthetics
                                                 Three Months Ended                                                      Nine Months Ended
                            June 26,          June 27,                                             June 26,          June 27,
                              2021              2020                     Change                      2021              2020                     Change
                             Amount            Amount           Amount              %               Amount            Amount           Amount              %
Total Revenues            $       -          $     -          $     -                  -  %       $     -           $  65.3          $ (65.3)            (100.0) %
Operating Loss            $       -          $  (1.0)         $   1.0             (100.0) %       $     -           $ (54.3)         $  54.3             (100.0) %
Operating Loss as a % of
Segment Revenue                   -  %        (100.0) %                                                 -   %         (83.2) %


Medical Aesthetics revenue and operating loss decreased in the current three and
nine month periods compared to the corresponding periods in the prior year due
to the divestiture of the Medical Aesthetics segment on December 30, 2019, the
first day of our second quarter of fiscal 2020. The operating loss in fiscal
2020 included an intangible assets and equipment impairment charges of $30.2
million.

LIQUIDITY AND CAPITAL RESOURCES
At June 26, 2021, we had $1,019.3 million of working capital and our cash and
cash equivalents totaled $827.6 million. Our cash and cash equivalents balance
increased by $126.6 million during the first nine months of fiscal 2021
primarily due to cash generated from operating activities, partially offset by
cash used in investing and financing activities.
In the first nine months of fiscal 2021, our operating activities provided cash
of $1,865.0 million, primarily due to net income of $1,540.9 million, non-cash
charges for depreciation and amortization aggregating $289.1 million,
stock-based compensation expense of $51.0 million, and a debt extinguishment
loss of $21.6 million, partially offset by a decrease in deferred income taxes
of $44.3 million primarily due to the amortization of intangible assets. Cash
provided by operations was negatively impacted by a net cash outflow of $13.1
million from changes in our operating assets and liabilities. The net cash
outflow was primarily driven by a $82.4 million increase in inventory primarily
due to an increase in Diagnostics inventory to support the SARS-CoV-2 assay
demand and production as well as an increase in Breast Health to support the
increase in mammography systems, a decrease in accrued expenses of $27.6 million
primarily due to payments for federal income taxes and value-added tax payments,
partially offset by an increase in accrued compensation and employee benefits,
an increase in prepaid income taxes of $24.3 and an increase in prepaid expenses
and other assets of $22.3 million primarily due to an increase in technology
implementation costs and the timing of value-added tax receivables. These cash
outflows were partially offset by a decrease in accounts receivable of $111.5
million primarily due to payments received from customers that had large
balances from COVID-19 assay sales in our Diagnostics division and lower
revenues in the third quarter of fiscal 2021 compared to the fourth quarter of
fiscal 2020, and an increase in accounts payable of $9.4 million primarily due
to the timing of payments.
In the first nine months of fiscal 2021, our investing activities used cash of
$1,286.5 million primarily related to net cash paid for our fiscal 2021
acquisitions of Biotheranostics, Diagenode, Somatex and Mobidiag Oy of $1,163.3
million and net capital expenditures of $114.6 million, which primarily
consisted of the placement of equipment under customer usage agreements and
purchases of manufacturing equipment to expand capacity of our molecular
diagnostics manufacturing facilities.
In the first nine months of fiscal 2021, our financing activities used cash of
$447.8 million primarily related to $970.8 million for the repayment of our 2025
Senior Notes, $250.0 million for the net repayment of amounts borrowed under our
revolving credit line, $409.7 million for repurchases of our common stock, $56.3
million for scheduled principal payments under our 2018 Credit Agreement and
$46.9 million for the payment of employee taxes withheld for the net share
settlement of vested restricted stock units. Partially offsetting these uses of
cash were net proceeds of $950.0 million under our 2029 Senior Notes, $320.0
million of proceeds under the accounts receivable securitization agreement that
we restarted in the third quarter of fiscal 2021 to partially fund the Mobidiag
acquisition, and $39.6 million from our equity plans, primarily from the
exercise of stock options.
Debt
We had total recorded debt outstanding of $3.12 billion at June 26, 2021, which
was comprised of amounts outstanding under our 2018 Credit Agreement of $1.40
billion (principal of $1.41 billion), 2029 Senior Notes of $934.0 million
(principal of $950.0 million), 2028 Senior Notes of $395.2 million (principal of
$400.0 million), Securitization Program of $320.0 million, and $66.0 million in
debt acquired in the Mobidiag acquisition.
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2018 Credit Agreement
On December 17, 2018, we refinanced our term loan and revolving credit facility
by entering into an Amended and Restated Credit and Guaranty Agreement as of
December 17, 2018 (the "2018 Credit Agreement") with Bank of America, N.A. in
its capacity as Administrative Agent, Swing Line Lender and L/C Issuer, and
certain other lenders. The 2018 Credit Agreement amended and restated the
Company's prior credit and guaranty agreement, amended and restated as of
October 3, 2017 ("2017 Credit Agreement").

The credit facilities under the 2018 Credit Agreement consisted of:



•A $1.5 billion secured term loan ("2018 Amended Term Loan") with a maturity
date of December 17, 2023; and
•A secured revolving credit facility (the "2018 Amended Revolver") under which
the Company may borrow up to $1.5
billion, subject to certain sublimits, with a maturity date of December 17,
2023.
The borrowings of the 2018 Amended Term Loan bear interest at an annual rate
equal to the Eurocurrency Rate (i.e., the LIBOR rate) plus an Applicable Rate,
which was equal to 1.0% as of June 26, 2021. The borrowings of the 2018 Amended
Revolver bear interest at a rate equal to the LIBOR Daily Floating Rate plus an
Applicable Rate equal to 1.0% as of June 26, 2021. At June 26, 2021, borrowings
under the 2018 Amended Term Loan were subject to an interest rate of 1.11%.

We are required to make scheduled principal payments under the 2018 Amended Term
Loan in increasing amounts ranging from $9.375 million per three-month period
commencing with the three-month period ending on December 27, 2019 to $28.125
million per three-month period commencing with the three-month period ending on
December 29, 2022 and ending on September 29, 2023. The remaining balance of the
2018 Amended Term Loan after the scheduled principal payments, which was $1.2
billion as of June 26, 2021, and any amount outstanding under the 2018 Amended
Revolver are due at maturity. In addition, subject to the terms and conditions
set forth in the 2018 Credit Agreement, we may be required to make certain
mandatory prepayments from the net proceeds of specified types of asset sales
(subject to certain reinvestment rights), debt issuances and insurance
recoveries (subject to certain reinvestment rights). These mandatory prepayments
are required to be applied by us, first, to the 2018 Amended Term Loan, second,
to any outstanding amount under any Swing Line Loans, third, to the 2018 Amended
Revolver, fourth to prepay any outstanding reimbursement obligations with
respect to Letters of Credit and fifth, to cash collateralize any Letters of
Credit. Subject to certain limitations, the Company may voluntarily prepay any
of the 2018 Credit Facilities without premium or penalty.
Borrowings are secured by first-priority liens on, and a first-priority security
interest in, substantially all of the assets of the Company and its U.S.
subsidiaries, with certain exceptions. For example, borrowings under the 2018
Credit Agreement are not secured by those accounts receivable that are
transferred to the special purpose entity under a qualifying accounts receivable
securitization program.
The 2018 Credit Agreement contains affirmative and negative covenants
customarily applicable to senior secured credit facilities, including covenants
restricting our ability, subject to negotiated exceptions, to incur additional
indebtedness and grant additional liens on its assets, engage in mergers or
acquisitions or dispose of assets, enter into sale-leaseback transactions, pay
dividends or make other distributions, voluntarily prepay other indebtedness,
enter into transactions with affiliated persons, make investments, and change
the nature of their businesses. In addition, the 2018 Credit Agreement requires
us to maintain certain financial ratios. The 2018 Credit Agreement also contains
customary representations and warranties and events of default, including
payment defaults, breach of representations and warranties, covenant defaults,
cross defaults and an event of default upon a change of control of the company.

The 2018 Credit Agreement contains two financial covenants (a total net leverage
ratio and an interest coverage ratio) measured as of the last day of each fiscal
quarter. As of June 26, 2021, we were in compliance with these covenants.
The UK Financial Conduct Authority announced in 2017 that it intended to phase
out LIBOR by the end of 2021, which has been extended to June 30, 2023. If
changes are made to the method of calculating LIBOR or LIBOR ceases to exist, we
may need to amend certain contracts, including our 2018 Credit Agreement, and we
cannot predict what alternative rate or benchmark would be negotiated or the
extent to which this would adversely affect our interest rate and the
effectiveness of our interest rate hedging activity.

2028 Senior Notes



The total aggregate principal balance of the 2028 Senior Notes is $400.0
million. The 2028 Senior Notes are general senior unsecured obligations of the
Company and are guaranteed on a senior unsecured basis by certain of the
Company's domestic subsidiaries. The 2028 Senior Notes were issued pursuant to
an indenture, dated as of January 19, 2018, among the
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Company, the guarantors and Wells Fargo Bank, National Association, as trustee.
The 2028 Senior Notes mature on February 1, 2028 and bear interest at the rate
of 4.625% per year, payable semi-annually on February 1 and August 1 of each
year. We may redeem the 2028 Senior Notes at any time prior to February 1, 2023
at a price equal to 100% of the aggregate principal amount so redeemed, plus
accrued and unpaid interest, if any, to the redemption date and a make-whole
premium set forth in the indenture. We may also redeem up to 35% of the
aggregate principal amount of the 2028 Senior Notes with the net cash proceeds
of certain equity offerings at any time and from time to time before February 1,
2021, at a redemption price equal to 104.625% of the aggregate principal amount
so redeemed, plus accrued and unpaid interest, if any, to the redemption date.
We also have the option to redeem the 2028 Senior Notes on or after: February 1,
2023 through February 1, 2024 at 102.312% of par; February 1, 2024 through
February 1, 2025 at 101.541% of par; February 1, 2025 through February 1, 2026
at 100.770% of par; and February 1, 2026 and thereafter at 100% of par. In
addition, if there is a change of control coupled with a decline in ratings, as
provided in the indenture, we will be required to make an offer to purchase each
holder's 2028 Senior Notes at a price equal to 101% of their principal amount,
plus accrued and unpaid interest, if any, to the repurchase date.
2029 Senior Notes

The total aggregate principal balance of the 2029 Senior Notes is $950.0
million. The 2029 Senior Notes are general senior unsecured obligations of the
Company and are guaranteed on a senior unsecured basis by certain domestic
subsidiaries. The 2029 Senior Notes mature on February 15, 2029 and bear
interest at the rate of 3.250% per year, payable semi-annually on February 15
and August 15 of each year, commencing on February 15, 2021. We may redeem the
2029 Senior Notes at any time prior to September 28, 2023 at a price equal to
100% of the aggregate principal amount so redeemed, plus accrued and unpaid
interest, if any, to the redemption date and a make-whole premium set forth in
the indenture. We may also redeem up to 40% of the aggregate principal amount of
the 2029 Senior Notes with the net cash proceeds of certain equity offerings at
any time and from time to time before September 28, 2023, at a redemption price
equal to 103.250% of the aggregate principal amount so redeemed, plus accrued
and unpaid interest, if any, to the redemption date. We have the option to
redeem the 2029 Senior Notes on or after: September 28, 2023 through September
27, 2024 at 101.625% of par; September 28, 2024 through September 27, 2025 at
100.813% of par; and September 28, 2025 and thereafter at 100% of par. In
addition, if there is a change of control coupled with a decline in ratings, as
provided in the indenture, we will be required to make an offer to purchase each
holder's 2029 Senior Notes at a price equal to 101% of their principal amount,
plus accrued and unpaid interest, if any, to the repurchase date.

Accounts Receivable Securitization Program



On April 25, 2016, we entered into a one-year accounts receivable securitization
program (the "Securitization Program") with several of our wholly owned
subsidiaries and certain financial institutions. The Securitization Program
provides for annual renewals. Under the terms of the Securitization Program, we
and certain of our wholly-owned subsidiaries sell our customer receivables to a
bankruptcy remote special purpose entity, which is wholly-owned by us. The
special purpose entity, as borrower, and we, as servicer, have entered into a
Credit and Security Agreement with several lenders pursuant to which the special
purpose entity may borrow from the lenders up to the maximum borrowing amount
allowed, with the loans secured by the receivables. The amount that the special
purpose entity may borrow at a given point in time is determined based on the
amount of qualifying receivables that are present in the special purpose entity
at such point in time. The assets of the special purpose entity secure the
amounts borrowed and cannot be used to pay our other debts or liabilities.

In response to the market uncertainties created by the COVID-19 pandemic, on
March 26, 2020, we paid-off the total amount outstanding of $250.0 million
previously borrowed. On April 13, 2020, we amended the Credit and Security
agreement with the lenders, temporarily suspending the ability to borrow and the
need to comply with covenants for up to a year. On June 11, 2021, we amended and
restated the Credit and Security agreement to restart the Securitization Program
and increase the maximum borrowing amount to $320.0 million. Loans outstanding
under the Securitization Program bear interest at LIBOR plus an applicable
margin for defined tranches. As of June 26, 2021, there was $320.0 million
outstanding under this program. The weighted average interest rate under the
Securitization Program was 0.78% as of June 26, 2021.

Contingent Consideration Earn-Out Payments



In connection with certain of our acquisitions, we have incurred the obligation
to make contingent earn-out payments tied to performance criteria, principally
revenue growth of the acquired business over a specified period. In addition,
contractual provisions relating to these contingent earn-out obligations may
result in the risk of litigation relating to the calculation of the amount due
or our operation of the acquired business. Such litigation could be expensive
and divert management attention and resources. Our obligation to make contingent
payments may also result in significant operating expenses.

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Contingent consideration arrangements are recorded as either additional purchase
price or compensation expense if continuing employment is required to receive
such payments. Pursuant to ASC 805, contingent consideration that is deemed to
be part of the purchase price is recorded as a liability based on the estimated
fair value of the consideration we expect to pay to the former shareholders of
the acquired business as of the acquisition date. This liability is re-measured
each reporting period with the change in fair value recorded through a separate
line item within our Consolidated Statements of Income. Increases or decreases
in the fair value of contingent consideration liabilities can result from
changes in discount rates, changes in the timing, probabilities and amount of
revenue estimates, and accretion of the liability for the passage of time.

Our primary contingent consideration liability is from our Acessa acquisition.
We have an obligation to the former Acessa shareholders to make contingent
payments based on a multiple of annual incremental revenue growth over a
three-year period ending annually in December. There is no maximum earnout.
Pursuant to ASC 805, the contingent consideration was deemed to be part of the
purchase price, and we recorded our estimate of the fair value of the contingent
consideration liability utilizing the Monte Carlo simulation based on future
revenue projections of the business, comparable companies revenue growth rates,
implied volatility and applying a risk adjusted discount rate. At June 26, 2021
this liability was recorded at its fair value of $71.7 million, and no
contingent payments have been earned or made.

Stock Repurchase Program
On December 9, 2020, the Board of Directors authorized a new five-year share
repurchase plan, to purchase up to $1.0 billion of our outstanding common stock.
The prior plan was terminated in connection with this new authorization. During
the third quarter of fiscal 2021, we repurchased 3.0 million shares of our
common stock for a total consideration of $188.4 million. As of June 26, 2021,
$691.6 million remained available under this authorization.

Legal Contingencies
We are currently involved in several legal proceedings and claims. In connection
with these legal proceedings and claims, management periodically reviews
estimates of potential costs to be incurred by us in connection with the
adjudication or settlement, if any, of these proceedings. These estimates are
developed, as applicable in consultation with outside counsel, and are based on
an analysis of potential litigation outcomes and settlement strategies. In
accordance with ASC 450, Contingencies, loss contingencies are accrued if, in
the opinion of management, an adverse outcome is probable and such financial
outcome can be reasonably estimated. It is possible that future results for any
particular quarter or annual period may be materially affected by changes in our
assumptions or the effectiveness of our strategies relating to these
proceedings. Information with respect to this disclosure may be found in Note 10
to the Consolidated Financial Statements in this Quarterly Report on Form 10-Q,
which information is incorporated herein by reference.

Future Liquidity Considerations



We expect to continue to review and evaluate potential strategic transactions
that we believe will complement our current or future business. Subject to the
"Risk Factors" set forth in Part II, Item 1A of this Quarterly Report, if any,
as well as those described in our Annual Report on Form 10-K for the fiscal year
ended September 26, 2020 or any other of our subsequently filed reports, and the
general disclaimers set forth in our Special Note Regarding Forward-Looking
Statements at the outset of this MD&A, we believe that our cash and cash
equivalents, cash flows from operations, and the cash available under our 2018
Amended Revolver will provide us with sufficient funds in order to fund our
expected normal operations and debt payments over the next twelve months. Our
longer-term liquidity is contingent upon future operating performance. We may
also require additional capital in the future to fund capital expenditures,
repayment of debt, acquisitions, strategic transactions or other investments. As
described above, we have significant indebtedness outstanding under our 2018
Credit Agreement, 2028 Senior Notes, 2029 Senior Notes and Securitization
Program. These capital requirements could be substantial. For a description of
risks to our operating performance and our indebtedness, see "Risk Factors" in
Part I, Item 1A in our Annual Report on Form 10-K for the fiscal year ended
September 26, 2020.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The discussion and analysis of our financial condition and results of operations
are based upon our interim consolidated financial statements, which have been
prepared in accordance with U.S. generally accepted accounting principles. The
preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates, including those
related to revenue recognition for multiple element arrangements, allowance for
doubtful accounts, reserves for excess and obsolete inventories, valuations,
purchase price allocations and contingent consideration related to business
combinations, expected future cash flows including growth rates, discount rates,
terminal
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values and other assumptions used to evaluate the recoverability of long-lived
assets and goodwill, estimated fair values of intangible assets and goodwill,
amortization methods and periods, warranty reserves, certain accrued expenses,
restructuring and other related charges, stock-based compensation, contingent
liabilities, tax reserves and recoverability of our net deferred tax assets and
related valuation allowances. We base our estimates on historical experience and
various other assumptions that are believed to be reasonable under the
circumstances. Actual results could differ from these estimates if past
experience or other assumptions do not turn out to be substantially accurate.
Any differences may have a material impact on our financial condition and
results of operations. For a discussion of how these and other factors may
affect our business, see the "Cautionary Statement" above and "Risk Factors" set
forth in Part II, Item 1A of this Quarterly Report as well as those described in
our Annual Report on Form 10-K for the fiscal year ended September 26, 2020 or
any other of our subsequently filed reports.
The critical accounting estimates that we believe affect our more significant
judgments and estimates used in the preparation of our consolidated financial
statements presented in this report are described in Management's Discussion and
Analysis of Financial Condition and Results of Operations and in the Notes to
the Consolidated Financial Statements included in our Annual Report on Form 10-K
for the fiscal year ended September 26, 2020. There have been no material
changes to our critical accounting policies or estimates from those set forth in
our Annual Report on Form 10-K for the fiscal year ended September 26, 2020.

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